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MR PRICE GROUP LIMITED - Trading update for the 18 weeks ended 6 August 2016

Release Date: 31/08/2016 15:00
Code(s): MRP     PDF:  
Wrap Text
Trading update for the 18 weeks ended 6 August 2016

Mr Price Group Limited
(Registration number 1933/004418/06)
Incorporated in the Republic of South Africa
ISIN: ZAE000200457
JSE share code: MRP
("Mr Price Group" or "the Group" or "the Company")

TRADING UPDATE FOR THE 18 WEEKS ENDED 6 AUGUST 2016

The recent winter season has been the most difficult we have
experienced in well over a decade.

Unseasonally warm weather at the start of winter and higher prices
from the weaker rand inhibited sales. There has also been a
fundamental shift in consumer spending in South Africa, with higher
unemployment and low economic growth significantly dampening
consumer confidence and spending, as evidenced in recently
announced weak national sales in both the retail and automotive
sectors. Trading patterns have become very volatile during the
two thirds of the month when cash is in short supply.
Credit sales continue to be impacted by legislation changes made
in September last year. There has also been little improvement in
our external markets such as Nigeria.

While all divisions were under pressure in this environment, the
apparel businesses were the most impacted. Although in MRP Apparel
certain product opportunities were missed, the chain was more
affected by the heavy discounting of winter product by competitors.
In hindsight, winter goods should have been marked down earlier
than usual, and a higher level of markdowns are now being taken
which will impact margins. Miladys which is in the process of
realigning its customer focus, also had a poor winter, and, being
a largely credit business, felt the effect of the revised credit
granting regulations.

During the first 18 weeks (03 April 2016 to 06 August 2016) of the
financial year ending 1 April 2017, Mr Price Group recorded growth
of 2.3% in retail sales and other income over the corresponding
period in the prior year.

Other income, mainly from the financial services and cellular
operations, grew by 29.6%.

Retail sales increased by 1.0% (comparable -2.4%). A weaker ZAR/USD
exchange rate contributed to retail selling price inflation of
11.2% and 9.1% lower units being sold.
                    Total     Comparable     Trading
                    Sales          Sales       Space

MRP Apparel           0.0%         -3.6%        5.7%
MRP Sport            14.2%          2.4%        5.6%
Miladys             -11.2%        -12.3%        0.4%
MRP Home              2.9%          1.2%       -3.2%
Sheet Street          5.5%          5.0%        0.4%
Total                 1.0%         -2.4%        2.6%

Cash sales increased by 2.8% and credit sales were 6.6% lower than
the corresponding period.

Sales in South Africa increased by 1.5% (comparable -1.8%) and in
external markets growth was lower at -3.2% (comparable -9.3%).

Given the soft winter and the weak trading environment over the
past 18 weeks it is unlikely that earnings for the half-year to
September will exceed the previous year. Further earnings guidance
will be communicated after the end of the trading period.

While the length and depth of the current downturn is at present
unclear, the Company has successfully negotiated previous negative
cycles. The Group is responding to the changing economic and
competitive environment by focusing on delivering merchandise at
exceptional value. In the long-term, the Group’s fashion value
business model and strong cash flow generation and balance sheet
will sustain its competitive advantage.

The above-mentioned figures and any information contained herein
do not constitute an earnings forecast and have not been reviewed
and reported on by the Company’s external auditors.

Durban
31 August 2016
Sponsor: Rand Merchant Bank (A division of FirstRand Bank Ltd)

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