Mr Price surprises with interim sales growth
Sales in non-SA corporate-owned stores grew 9.1% to R520.8m, while SA sales increased 6.4% to R6.4bn
Retail group Mr Price has provided an upbeat assessment of its performance in the first four months of its financial year, but reports that consumers remain under pressure and that tough trading conditions persist.
The group’s retail sales and other income grew 7.4% to R7.4bn in the 18 weeks to August 25, with the retailer citing its low-price model as a reason to be bullish, despite a stagnant economy and depreciating rand.
Total retail sales, including sales to franchisees, of R6.9bn were 6.5% higher than the corresponding period, with this figure lifted by strong online sales growth and from its newly incorporated Kenyan stores.
Sales in non-SA corporate-owned stores grew 9.1% to R520.8m, while SA sales increased 6.4% to R6.4bn. This exceeded the combined sales growth of 3.5% for retailers as reported by Statistics SA for April to June, the period for which market information is available, the group said.
CONSUMER SPENDING REMAINS CONSTRAINED BY THE VAT HIKE AND FUEL COST INCREASES
Argon Asset Management equity analyst Bjorn Samuels said the numbers came as a bit of a surprise, since they were over a period that largely overlapped the weak results recently reported by most retailers.
Consumer spending remains constrained by the VAT hike and fuel cost increases, he said. Household costs are also rising faster than wages.
"It is likely that the positive sales growth figures are due to consumers downtrading and because of Mr Price’s focus on the mid-to lower-end retail segment. We would caution anyone from extrapolating these results across the broader retail sector," he said.
Mr Price reported selling price inflation for the period of 4.2% while net weighted average trading space rose 1.8%.
Revenue from the retail group’s newly implemented cellphone kiosks performed well, growing 56.7% to R196.5m, while online sales increased 28.1% to R83.2m.
This was largely driven by MRP Apparel online, which grew 37.6% and MRP Sport, which grew sales 31.3%.
Group cash sales increased 7%, while credit sales grew 4.1%.
Debtors’ interest and fees increased 6.9% to R160.1m and insurance revenue of R85.5m rose 6.9%.
However, the group’s statement disappointed the markets with Mr Price’s share falling 4.44% to R229.12, compared to a 2.99% drop in the JSE’s general retail index, and a 2.27% fall in the all share.