Mr Price maintains solid sales growth in third quarter

Cash-based retailer Mr Price Group said on Thursday it had maintained its 14.2% sales growth rate through the third quarter of its 2015 financial year, buoyed by cash sales and its apparel stores.

Growth in the third quarter to December 27 matched the one in the first half of the financial year.

Mr Price said the performance was “pleasing” since it was off a high base, and considering festive season power outages and a subdued retail environment in homewares. With 30 new stores opened and 3 closed, or trading space up 4.8%, comparable store sales grew 9.6%.

Cash sales growth at 15.3% outpaced a surge of 9.6% in credit purchases. This slightly pushed up the contribution of cash sales to 81.9% of total turnover.

The Foschini Group (TFG), which has been reducing its bias towards credit sales in a consumer market characterised by high levels of indebtedness, said on Thursday group sales for the nine months to December 27 rose 10.5%. Comparable store sales were up 5.1%, TFG said, a day after it announced it was in “advanced discussions” about a potential acquisition.

TFG, which still generates less than half its sales from cash payments, did not disclose a breakdown between cash and credit sales for the period.

Earlier in the week, TFG competitor Truworths International disappointed the market with its sales numbers, and said credit sales were unchanged at 71% of total sales.

Truworths’ retail sales in the 26 weeks to December 28 increased 5.2% to R6.2bn, with comparable store sales down 0.8%.

Mr Price said that its apparel division, its largest unit that includes Mr Price, Mr Price Sport, and Miladys, achieved sales growth of 16.1% in the third quarter “despite a suboptimal performance from Miladys”. The home division, which includes its Mr Price Home and Sheet Street stores, grew sales 8.7%.

Mr Price said group sales growth in the fourth quarter so far had been at a similar level to the third quarter’s growth.

Shares in Mr Price closed 2.30% higher at R246.60 on Thursday, though this was slightly below the intraday highs reached just before the update.

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