Has Mr Price lost its snap?
For years Mr Price was the darling of the retail sector. But its January trading update sparked a dramatic slide. Has it lost its mojo?
As a stock analyst with nearly two decades’ experience, Sasfin Bank’s Alec Abraham has seen a number of high-flying companies crash back to earth. In recent months, he became concerned about what he saw as an alarming shift in focus from the one-time darling of the clothing retail sector, Mr Price. "For years, Mr Price’s philosophy was to provide designer fashion at an affordable price. It got them a prime slice of that higher income market, and it worked exceedingly well ," says Abraham. He isn’t exaggerating: the company hit a sweet spot that few others were brave enough to try during the dark days of the late 1980s, when the economy was battling under PW Botha’s last kicks of grand apartheid. At the time, founders Laurie Chiappini and Stewart Cohen had returned from a trip to the US with the plan to replicate the American cash-based factory shop idea — a somewhat radical proposition, as the dominant idea at the time was of a retail sector led by the likes of Edgars pushing credit...
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