The group’s share price shot up over 10% as the market digested its interim results.
A Studio 88 store at a Vukile Property Fund mall. Mr Price says it has sufficient stock for the festive season despite highlighting some challenges at local ports. Image: Akhona Matshoba/Moneyweb
Recently acquired footwear and sports apparel retail chain Studio 88 has delivered strongly to Mr Price Group’s 26.4% surge in half-year revenue, coming in at R16.8 billion for the 26 weeks ended 30 September 2023.
This helped the Durban-based apparel and home retail giant push through a tough economic period affected by load shedding and a weaker consumer.
On Thursday, Mr Price reported in its latest results that without Studio 88’s contribution, group revenues would have registered a pedestrian 3.5% growth to R13.7 billion for the half-year.
The group’s share price surged over 10% in morning trade, above the R164 mark, as investors began digesting the half-year results.
Mr Price’s share price
Challenges
However, the interim results were hit by a challenging first quarter in which the group had to plough R140 million worth of capital to shield itself against load shedding, which it says cost it about 60 000 lost trading hours.
This resulted in an estimated R190 million in potential revenue that was not realised.
Additionally, the quarter saw a high inflationary environment that hurt its core customer base, the value consumer, the most. Lost trading hours due to load shedding coupled with an underpressure consumer saw the retailer leaning more on promotional activity to clear stale stock off its racks, affecting margins.
Mr Price’s headline earnings per share (Heps) dropped by 9.3% in the period to 44.9 cents, while operating profit declined slightly by 0.4% to R1.9 billion, leading to a 320bps decline in operating margin to 11.5% of retail sales and other income.
An interim dividend was declared that was 9.3% lower, at 283.5 cents per share, compared to last year’s 312.5 cents.
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