Mr Price shares rally as double-digit sales growth pierces retail sector gloom
bdlive.co.za - Sep 4th 2014, 10:46
Shares in Mr Price rose as much as 2.3% to R210 on Wednesday after it reported double-digit sales growth, bucking the trend in the retail sector.
The value retailer, which reported a 16% sales rise for the 18 weeks to August 2, has seen its budget-friendly offerings continue to appeal to shoppers despite a struggling economy.
Cash sales at the group rose 19%, exceeding credit sales growth of 5.7%, and accounted for 80.6% of total sales.
"As a fashion-value retailer, the group is comparatively well positioned," Mr Price said. "However, cognisance must be taken of the comparable period last year when Mr Price apparel performed exceptionally well … setting a very high base.
"The other chains are also expected to face tougher trading conditions in the second half."
Revenue in its clothing division, which includes Mr Price Apparel, Mr Price Sport, and Miladys, grew 18%, from 14% a year earlier. Mr Price Apparel delivered strong sales growth and continued to increase market share, while Mr Price Sport performed in line with expectations.
Miladys experienced a disappointing trading period because of the difficult credit environment and some incorrect merchandise calls. Mr Price, whose credit sales growth spiked in the third quarter of its 2011 financial year, albeit at a lower level than the market experienced, has adopted a more cautious approach to credit, preserving its cash model.
In order to manage their books through the tough credit cycle, retailers including The Foschini Group and Truworths have also introduced stricter lending criteria as consumers battle to pay store accounts.
Mr Price’s home segment achieved sales growth of 11.2%, and 7.4% on a comparable basis.
Last week, Momentum portfolio manager Wayne McCurrie said the local consumer was struggling. "We’ve had all the strikes, there’s been virtually no job creation … the economy is doing quite badly, debt levels are high, and interest rates are going up.
"The overall consumer environment is relatively poor."From DFM Publishers (Pty) Ltd
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