MR PRICE will invest R2bn over the next three years

Mr Price puts R2bn into staying on top

Shoppers browse through a Mr Price Home outlet. Picture: SUNDAY TIMES
MR PRICE will invest R2bn over the next three years to entrench its position as the continent’s leading fast-fashion value retailer.

The group, which on Tuesday reported diluted headline earnings per share growth of 22.4% for the year to March, is increasing its focus on new sales channels such as the internet. Online sales have grown threefold and the group will also expand its footprint into markets such as West Africa.

Mr Price is building a new distribution centre in Durban and investing in more stores and new merchandise systems.

These investments are being made against the backdrop of heightened competition as global retailers enter South Africa and peers such as Woolworths look to add scale through apparel buyouts.

Mr Price CEO Stuart Bird said the performance of new channels and markets was “very encouraging” and provided “early support for our intentions of taking our proven business concepts to new territories, rather than looking for acquisitive growth”.

Mr Price reported diluted headline earnings per share of 715.1c and a dividend of 482 c a share was declared, up 21.1%.

The company has taken market share from beleaguered Edgars, which is in the midst of a turnaround, and from credit rivals Truworths and Foschini Group, who have curbed credit extension due to the high levels of consumer indebtedness.

Sales at the apparel division — which houses Mr Price, Mr Price Sport and Miladys — grew 17%, to R11.4bn, with comparable store sales growth at 11.9%.

The group was “absolutely bulletproof”, said 36One Asset Management equity analyst Daniel Isaacs.

“You can’t fault these guys. The apparel sales were just superb. I think they’ve definitely picked up a lot of market share. In this economic storm I think Mr Price is probably the best positioned out of all of them (clothing retailers),” Mr Isaacs said.

The Home division, consisting of Mr Price Home and Sheet Street, grew 10.2% to R4.2bn, with comparable store sales growth up 7.3%.

The slower growth in this segment is in line with broader market trends as sales of home products tend to be more discretionary.

Mr Price’s cautious approach to credit resulted in cash sales growth of 16.1% outstripping credit sales growth of 9.6%.

“We may have lost some sales opportunities by restricting our credit growth, but we are confident that this approach remains the right one,” Mr Bird said.

Trade receivables increased 13.1% to R1.8bn, with much of the growth occurring in the first half of the financial year. The net bad debt to book ratio increased from 6.5% to 7.6%.

Mr Price started its online offering in 2012 and now ships to more than 130 countries.

An online presence is key to entering new markets, especially where space is a constraint or rentals are high — this is especially the case in many African countries.

“Online is growing so quickly, it’s already a moving target. We’re already doing R10m a month,” Mr Bird said.

Mr Price will open two stores in Nigeria and one in Ghana, and is also in the early stages of looking at the Angolan market.

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