Mr Price boosted by improved perception
The retailer grew its interim dividend and earnings by more than 11%, which incoming CEO Mark Blair called a pleasing result in a tough environment
Improved consumer perception of Mr Price's quality and fashion helped it grow sales and profit in the first half of its 2019 financial year.
The retail group declared an interim dividend of 311.4c in its results for the 26 weeks to September 29, released on Thursday morning. That is an 11.6% increase on its R2.79 interim dividend for the first half of its 2018 financial year.
Commentary in the results statement was provided by CFO Mark Blair, who will succeed Stuart Bird as CEO on January 1.
“Sales growth in our apparel and homeware segments was ahead of the market for the period, a positive indication of market share gains,” Blair said.
“Independent research has confirmed that consumers’ perception of MRP’s quality and fashion has improved relative to our competitors, and that our price positioning has been further entrenched.”
The group had 1,286 corporate-owned stores at September 29, 46 more than at the end of September 2017.
Mr Price groups its various retail chains into four divisions.
The largest is apparel, housing its flagship clothing chain along with Miladys and MRP Sport. It contributed 70% of what Mr Price terms retail sales and other income (RSOI) and 73% of operating profit.
The apparel division grew its top line by 6.2% to R7.3bn and operating profit by 11.25% to R1.2bn.
MRP Apparel grew sales by 5.9% to R5.9bn, beating the matching period's sales growth of 3%.
“Online sales grew at 31.6%, supporting the omni channel strategy,” Blair said.
Its home division, which houses MRP Home and Sheet Street, contributed 23% of the group's revenue and 20% of operating profit. It grew sales by 7.2% to R2.4bn and operating profit by 14% to R347m.
Mr Price's smallest division, financial services and cellular, grew revenue by 23% to R673m, but operating profit grew only 3.5% to R209m.
“Interest and fees increased 7.5% to R246m, insurance revenue grew 7.6% to R131m, while revenue in the cellular division accelerated to R296m, an increase of 52.3%. Cellular products are now sold through 249 locations across the group and its centralised call centre,” the results statement said.
The group reports central services as a cost centre, which contributed R13m revenue but dragged operating profit down by R99m, 6% more than the R92m in the matching period.
Mr Price's diluted headline earnings per share (HEPS) increased by 11.1% to 482.4c.
“To deliver double-digit earnings and dividend growth in a tough economic and retail environment is a pleasing result,” Blair said.