MR PRICE GROUP
The retail chains focus on clothing, footwear, sportswear, sporting goods, accessories and homewares. The Company operates three segments: the Apparel, which retails sportswear, footwear, sporting equipment and accessories; the Home segment, which retails homewares, and the Central Services segment, which provides services to the trading segments, including information technology, internal audit, human resources, real estate and finance. Apparel consists of Mr Price providing Clothing, footwear, accessories and maternity wear; Mr Price Sport providing Sporting apparel, footwear and accessories, and Miladys offering women's clothing, footwear, intimatewear, cosmetics and accessories. Home consists of Mr Price Home offering Home textiles, homewares, furniture and kids merchandise and Sheet Street offering Bedroom, livingroom and bathroomware.
Retail sales for the 53 week trading period ended 2 April 2011 increased by 12.9% (52 weeks: 10.5%). This compares favourably with the total retail sector, which, as reported by Statistics South Africa, grew by 7.5%. Sales in like-for like locations were up by 7.5% (52 weeks: 7.8%). The groups weighted average trading space increased by 0.7% as a result of expansions and new store openings beign offset by store closures. More than R180 million units were sold, an increase of 9.9% (52 weeks: 7.6%) and product inflation of 3.0% was recorded.
Other income grew by 11.9% as a result of increased interest received from trade receivables and premium income relating to the sale of financial services products.
Costs and expenses continued to rise at a lower rate than sales, increasing by 9.2%. The gross profit margin improved by 2.0% to 41.9% as a consequence of improved resourcing and lower amrkdowns. Sellign expenses were well controlled, increasing by 8.3%. Administrative expenses, impacted by higher performance based incentives, rose by 13.8% and by 12.1% after excluding once-off costs.
The operating margin increased from 10.5% to 13.4% (52 weeks: 13.2%) of retail sales and profit attributable to shareholders increased by 50.0% (52 weeks: 44.3%).
The taxation charge in the prior year was imapcted by the unbundling of the export partnerships.
Core bundling earnings per share, which excludes the financial adjustments relating to the export partnerships and is a true measure of trading performance, increased by 47.2% to 420.6 cents (52 week: 41.8% to 405.0 cents).
Additional disclosure regarding the impact of the 53rd week is contained in the presentation to anaylsts which is available on the company's website.
The board extends its appreciation to each of the group's 17 877 associates, whose efforts and commitments have made these results possible.
The group’s next growth phase will be driven by:
• the continued search for well positioned trading locations;
• expanding high trading density stores and extraction from unprofitable space;
• internationalisation of the business, initially via Africa; and
• engaging customers via alternative communication channels.
These initiatives will require us to increase our investment in information technology systems, supply chain processes and people development, which will all produce significant efficiency gains and added value.
Sustainability is important to the group’s long-term prosperity. It has arisen from the need to ensure it continues to prosper within an increasingly pressurised and volatile external environment, by developing appropriate competencies and capacities. The sustainability journey has helped the group gain a deeper understanding of the environment in which it
operates, clarifying the specifi c internal and external issues most critical to long-term sustainability.
The board has acknowledged the alignment between the group investing its resources in a manner that will set the foundation for long-term sustainable growth and fi nancial return for shareholders. In so doing, the retail industry, the broader community and the environment will all benefit, while the group will aid in achieving certain South African national priorities. Although the sustainability journey, with its broader and more formal framework, has brought about fresh thinking, it has confi rmed the belief that a long-term focus is well entrenched in the business. This is mainly due to the group’s strategic planning process and the identification of key imperatives – factors that must be successfully addressed for the group to achieve its goals. The next step in the process will be to report targets and measurement
indicators for key sustainability issues.
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