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MR PRICE GROUP LIMITED - Trading update for the third quarter and nine month period ended 29 December 2018

Release Date: 17/01/2019 07:05
Code(s): MRP     PDF:  
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Trading update for the third quarter and nine month period ended 29 December 2018

Mr Price Group Limited
Registration number 1933/004418/06
Incorporated in the Republic of South Africa
ISIN: ZAE 000200457
JSE share code: MRP
("the Group")

29 DECEMBER 2018

Group retail sales and other income (RSOI) for the nine month
period ended 29 December 2018 increased 5.8% over the
corresponding period in the prior year (“Corresponding Period”).
The Group’s South African retail sales growth exceeded the
combined sales growth of Type D and Type E retailers per Stats
SA for April to November (the period for which market information
is available) indicating continued market share gains.

During the third quarter (30 September 2018 to 29 December 2018)
of the financial year ending 30 March 2019, RSOI grew 3.5% to
R7.1bn. Total retail sales of R6.7bn (including franchise) were
2.0% higher. Corporate owned store performance was as follows:

                         Total         Comparable           Units         *RSP
                         sales        Store sales                    Inflation
Apparel Segment
MRP Apparel               0.4%              -2.7%           -4.3%         5.9%
MRP Sport                12.7%              12.1%            8.9%         4.5%
Miladys                   0.2%              -0.7%            1.6%        -0.9%
                          1.4%              -1.6%           -3.3%         5.7%
Home Segment
MRP Home                  4.9%               3.0%           -2.0%         8.0%
Sheet Street              1.0%              -1.4%           -0.1%         2.0%
                          3.7%               1.6%           -1.3%         6.0%
Group                     1.9%              -0.8%           -2.9%         5.8%

*Includes South African VAT increase effect from 14% to 15% in April 2018

The corporate store sales performance detailed above was below
expectations and analysis thereof should consider:
- sales growth of 8.5% in the Corresponding Period, which
  included a strong performance by the largest division, MRP
  Apparel, which grew sales 11.3%.
- the prevailing poor economic and retail environments in
  several markets in which the Group trades. In our largest
  market, South Africa, the following factors have reduced
  consumer   spending   power:  low   GDP   growth,   rising
  unemployment and inflation levels, a VAT rate increase,
  higher average fuel prices and an interest rate increase
  in November 2018.
- The deterioration in South African consumer confidence into
  Q3. This was in contrast to the optimism experienced in
  December 2017 post the ANC election outcome and subsequent
  change in South Africa’s president, which provided
  temporary support to the retail sector.
- November trade being impacted by lower Black Friday sales.
- December school holidays commencing a week later than the
  Corresponding Period. These holidays will return to normal
  in 2019.

South African retail sales grew 1.1% to R6.2bn. Store sales were
up 0.7% and online sales up 38.7%. The MRP Apparel online channel
achieved sales growth of 35.4%, MRP Home 54.9% and MRP Sport
40.5%. Non-South African corporate owned stores sales increased
by 13.1% to R505.8m.

Trading space increased 1.4% on a weighted average basis and
3.1% on a closing basis.

Despite high levels of competitor price discounting and
promotional activity over the quarter, the gross margin %
improved slightly on the prior year in all divisions.

Other income grew 35.3% to R411.1m, driven by an 85.9% increase
in mobile and cellular. Interest and fees relating to the credit
portfolio grew 7.7%, while insurance revenue declined 0.5%.

Consumers continue to favour transacting in cash, with cash
sales increasing 2.2%(constituting 84.7% of sales), and credit
sales increasing 1.4%.

The trading environment in Q4 is expected to remain very
challenging. Global and domestic market uncertainty continues
and improvements in the economy and consumer health are likely
to be muted until the risk events settle and the general
elections in South Africa take place in May 2019. Key focus
areas are inventory management (including clearing Q3 excess
stock and controlling Q4 fresh inputs) and delivering
merchandise that offers great value to our customers.

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.

17 January 2019
Sponsor: Rand Merchant Bank (A division of FirstRand Bank Ltd)

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