Mr Price raises sales amid weak economy
Johannesburg – Mr Price said yesterday that its sales exceeded R20 billion and earnings exceeded R10 a share for the first time since the group’s inception.
Chief executive Stuart Bird said the figure represented an important milestone for the company.
“We are very satisfied with these results, particularly after considering the headwinds that we confronted in terms of the subdued economy, changes in credit legislation, challenges in key African economies and the high base in our main apparel division,” said Bird.
The group’s diluted headline earnings a share rose 17.1 percent to 1 012.9 cents in the year to April.
The group reported that total revenue had grown by 8.4 percent to R19.6bn, with retail sales increasing by 8 percent to R18.7bn.
Bird said operating profit in the South African market grew 20.8 percent to absorb the impact of underperforming and new businesses.
He said cash sales came in 9.2 percent higher, while credit growth of 2.3 percent was inhibited by the introduction of new credit regulations last September, which slowed new account growth.
The group declared a final gross cash dividend of 419c a share – a 13.7 percent increase compared with the last period but said the final dividend was lower than headline earnings growth due to the increase in the dividend payout ratio at the interim stage.
Profit from operating activities rose 17.1 percent to R3.6bn, up from R3.1bn, while profit attributable to equity holders of parent entity was 15.4 percent higher at R2.6bn.
It said retail selling price inflation was 7 percent and unit sales were up by 1 percent to 231.1 million.
Bird said the group opened 45 new stores during the period under review and expanded 26 others to grow its store space.
But he warned that the consumer environment would remain depressed in the next financial year.
“A weak exchange rate impacts all apparel retailers and higher product inflation in the first half is expected to impact unit growth.
As a value retailer, our prices will rise less, so comparatively speaking, we are well-positioned,” he said.
The group said that despite exchange rate weakness and volatility, the merchandise gross profit percentage was held in line with last year at 41.9 percent.
The cellular gross margin, which had a higher contribution to group gross profit than previously, rose to 6.4 percent, mainly due to critical mass being achieved in MRP Mobile.
There were declines experienced in some of the stores, such as Miladys, which reported a decrease in sales of 1.9 percent to R1.4bn.
MRP Home, which targets higher-income customers, delivered results that were well ahead of budget and the prior period, despite muted sales growth of 5.9 percent.
Sheet Street’s sales grew by 5.3 percent to R1.4bn.
Local online sales grew by 63.6 percent.
Bird said MRP Home would open a test store in Australia in October.
“The company’s strong cash generation and healthy balance sheet have easily absorbed the impact of these investments, which are important platforms for expansion,” Bird said.