Mr Price’s strong second-half trading continues into new financial year

Mr Price Home store at Canal Walk, Century City. IAN LANDSBERG Independent Newspapers

Mr Price Home store at Canal Walk, Century City. IAN LANDSBERG Independent Newspapers

Published Jun 14, 2024


MR Price Group plans to spend R1 billion on capital expenditure during its 2025 financial year and it plans to open 200 new stores.

CEO Mark Blair said at the release of annual results for the year to March 31, 2024 that the later arrival of winter had caused subdued trade in the first two months of the 2025 year. Despite this, there were market share gains in April 2024 and sales growth recovered strongly in early June, driven by the onset of winter.

“We have strong positive momentum, and our team is energised by the plans we have in place,” he said.

Group retail sales in the first quarter to June 11, 2024 increased 4.4%, against sales growth in the base of 17%, at higher gross profit margins than the prior year.

Blair said port inefficiency and increasing shipping costs would add pressure. However, the acquisition of port equipment by Transnet, which would take some time to become operational, was encouraging.

“In the forthcoming year the group will focus on its existing operations, raising customer service levels, and investing appropriately,” he said.

Consumer relief in the latter half of the new year was expected in the form of moderating inflation, decreasing interest rates, and a boost to discretionary spending with individuals being allowed to withdraw additional funds from their retirement savings.

In the past year, the group said it had lost about 65 000 trading hours to load shedding, or R226 million in revenue. Most of this was in the first half, as 100% back-up power was reached by the end of the first quarter.

Global and domestic supply chain disruptions caused challenges in the management of stock. This was against the backdrop of a weak consumer environment as elevated inflation impacted low to middle-income households – the group’s core customer base.

However, Blair said there had been strong trading in the second half of the 52-week period to March 31, and diluted headline earnings per share grew by 17.4%.

The stronger performance was due to “significantly” improved sales momentum, gross profit margin expanding 160bps to 40.6%, and market share gains.

The final dividend was 17.8% up at 526.8 cents a share.

“The South African economy contracted between January and March 2024 and consumer pressures continue. In this period, group retail sales increased 5.9%, higher than the market, with a resultant increase in market share... demonstrating the strength of the group's brands and its strategic positioning,” Blair said.

Revenue increased by 15.5% to R37.9bn. This included the acquired Studio 88 Group (S88), effective 4 October 2023, excluding which revenue grew 5.8% to R30.3bn.

The group grew its annual market share by 30bps according to the Retailers’ Liaison Committee.

Diluted headline earnings per share for the 52 weeks grew 6.3% to 1 252.6 cents.

“Over the last year, we have had a great deal to contend with. By focusing on delivering value to our customers, the group has strengthened its market position, as evidenced by gaining market share for seven consecutive months at better margins,” Blair said.

In the past year some 103 million units that the group sold were sourced from South Africa. Near sourcing accounts for 50% of total units. The group opened 238 new stores, taking total stores to 2 900.

Operating profit increased 7.9%, and by 13.2% in the second half. Operating profit from the acquired businesses contributed R977m. The group had a R2.8bn cash balance at year end.

The largest division, Mr Price Apparel (42.2% contribution to retail sales), gained market share for seven consecutive months with lower markdowns and higher gross profit margin.

Power Fashion saw double-digit sales growth and 26 consecutive months of market share gains.

Studio 88, which contributed 20.9% to group retail sales, grew retail sales 9%.

In the Homeware segment, retail sales increased 0.3% to R6.3bn and comparable retail sales decreased 3.8%. Improved retail sales growth in the second half confirmed management’s view that structural changes to the segment had now mostly been absorbed.

The Telecoms segment retail sales increased 10.2% to R1.2bn and comparable sales grew 1.5%. Mr Price Cellular standalone stores performed strongly. Thirty new standalone stores were opened, taking the footprint to 804 locations.

The Financial Services segment revenue increased 4.8% to R869m. Considering the difficult economic conditions, the net bad debt to book percentage remained low by industry standards, Blair said.