Fashion retailer Mr Price boosted its market share in the six months to September by more than a third from three years ago through improved merchandising and sourcing initiatives.

Chief executive Alistair McArthur said yesterday that Mr Price swelled its share of the clothing retail market from 10 percent in 2006 to 13.5 percent in the review period. The group grew sales by 10.8 percent to R4.3 billion, despite a tough trading climate.

Though analysts believe the group gained substantially from the trend in consumers trading down, McArthur said Mr Price offered value to existing clients, who had been with the group for a number of years.

Shanay Narsi, an analyst at BoE Private Clients, said Mr Price would likely not relinquish market share when things started looking better as it had kept consumers walking through its doors in hard times.

Profit from operating activities added 14 percent and the operating margin rose from 7.7 percent to 8 percent of retail sales. The apparel chains (Mr Price, Mr Price Sport and Milady's), which constitute 71.3 percent of group sales, grew sales by 15.1 percent to R3bn. But the performance of the Milady's unit proved disappointing with sales decreasing by 5.9 percent to R471.9 million.

McArthur said this unit had been too conservative, not offering customers what they liked. "In recessionary times, people like newness, which was not what the group offered," he said. Zahira Osman, an analyst at Afena Capital, said management cited internal factors as a contributing factor to the poorer performance in this division.

"Reduced product cycles and lead times are some of the corrective measures in place that should improve the second half performance," Osman said.

Mr Price Sport generated sales of R193.6m, an increase of 17.1 percent. Mr Price grew sales by 20.3 percent to R2.4bn.

Osman said Mr Price had fast-moving fashion value items which appealed to the cost-conscious consumer and that the overall result was boosted by improved gross margins at the group level and better working capital management resulting in higher cash balances and therefore increased net finance income.

Narsi said the group's internal merchandising and sourcing project, Redgold, had stood the group in good stead and that Mr Price had likely stolen market share from rivals such as Foschini. "It's about the type of stock as well as getting the right amounts in store," he said.

McArthur said the group was concerned about the electricity hikes as it had already spent R45m on electricity in the review period. "Any more hikes will have a substantial effect on our business," he said.

Mr Price climbed 2.25 percent yesterday to close at R33.69.