Recent riots hit Mr Price’s shares despite its recorded 50% growth in retail sales
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DURBAN-based fashion and home retailer Mr Price slumped 6.5 percent on the JSE on Friday as the 50 percent growth in retail sales during the 18 weeks ended 2021 was overshadowed by supply chain disruptions, last month’s mayhem and weak consumer confidence.
The share closed at R219.35. Notably, the robust digital trend continued as sales of the group’s online channel increased 46.4 percent over the 2021 financial year contributing 2.9 percent to sales compared with 103.2 percent growth in 2020 and accounting for 1.6 percent of sales.
Mr Price, whose retail outlets include Mr Price Sport, Sheet Street and recently acquired Yuppiechef, said significant disruption was caused to its trade and supply chain operations by last month’s civil unrest in parts of Gauteng and KwaZulu-Natal.
The group said its primary port of entry, Durban, had its operations disrupted intermittently by the civil unrest and an unprecedented cyber attack at Transnet.
“All these factors have weighed heavily on business and consumer confidence, population mobility and hampered economic activity during the period,” said Mr Price.
The group said during the 18 weeks from April 4 to August 7 its financial year ending April 2, 2022, retail sales and other income (RSOI) growth surged by 48.8 percent to R8.6 billion supported by the inclusion of the recently acquired Power Fashion, effective April 1, 2021, and Yuppiechef, effective August 1, 2021. Excluding these acquisitions, RSOI grew 38.6 percent
The group said it continued gaining market share at Mr Price, its largest apparel business, for 15 consecutive months, while recently acquired Power Fashion business, which competed in the lower-income segment of the market, also gained market share during the period.
“Mr Price Sport performed strongly, of the group, but continues to face trading challenges due to the ongoing Covid-19 restrictions which have negatively affected schools, sports clubs and gyms,” said Mr Price.
Mr Price Home and Sheet Street collectively gained 150 basis points of market share during the period, said the group. Mr Price flagged, however, that in its first half of 2022 it expected gross profit margin to fall on inventory write-offs due to the riots and the inclusion of acquisitions, which trade at lower margins than the group. The company also said markdown levels that were higher than the historically low levels reported in the 2021 financial period had contributed to the lower gross profit margin.
It said store sales were up 40.5 percent over the 2021 financial year and 7.3 percent higher on 2020.
This was despite the closure of 539 stores at one stage during the week of civil unrest and 104 stores, which remained closed and did not trade for the last three weeks of the period due to either being looted or partially damaged to varying degrees.
South African retail sales grew 40.7 percent to R7.7bn over the 2021 financial year, compared with the 8.9 percent in 2020.
The group said the two-year growth of 8.9 percent included the effects of the Covid-19 level 5 lockdown in April 2020, subdued discretionary sales in the retail sector in June 2021, high levels of pent-up demand in the base and the store closures due to civil unrest in July 2021.