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Mr Price Group Limited
Registration number 1933/004418/06)
Incorporated in the Republic of South Africa
ISIN: ZAE000200457
LEI number: 378900D3417C35C5D733
JSE and A2X share code: MRP
("Company" or "group")
TRADING UPDATE FOR THE 13 WEEKS ENDED 30 DECEMBER 2023
During the third quarter from 1 October 2023 to 30 December 2023
(the Period) of the financial year ending 30 March 2024, the group
recorded growth in retail sales of 9.9% to R13.2bn. Comparable
store sales were up 4.1%. The total comparable market's retail
sales per the Retailers' Liaison Committee (RLC) grew 3.4%,
resulting in the group gaining 130bps market share over the Period.
CEO Mark Blair said, "We anticipated a shift in momentum once we
had successfully navigated the disruption of our ERP System change
and the installation of loadshedding back-up power facilities in
all our stores. Our trading performance improved monthly, and was
strong during the critical month of December, with retail sales up
15.5% and a market share gain of 180bps. Our group's growth was
led by our flagship division Mr Price Apparel, and further
supported by strong sales growth from our acquisitions, which were
fully in the base. Most pleasing from this result is that group
sales were also achieved at a higher gross margin % than last
year."
Performance summary
As experienced by the broader retail market, the quarter started
slowly in October and improved into November. The total comparable
market's retail sales grew 0.8% cumulatively in these two months
while the group recorded growth of 5.3%. The group gained 80bps of
market share over these months, including during the key Black
Friday week. Performance improved significantly in December as
group retail sales grew 15.5% (comparable store sales up 8.0%), at
higher gross margin % than the prior year.
The group achieved gross margin gains in each of its trading
segments and in eight of the nine trading divisions during the
Period.
Retail sales for the group's corporate-owned stores was as follows:
Retail sales Cont. to
growth retail sales
Q3 FY2024 vs FY2023
Apparel segment 11.7% 83.2%
Home segment 0.9% 14.2%
Telecoms segment 9.0% 2.6%
Group 9.9% 100.0%
Group retail sales grew 9.9% to R13.2bn and comparable store sales
increased 4.1%. South African retail sales grew 9.3% to R12.3bn
while non-South African corporate-owned store sales increased
18.1% to R964m. Total store sales increased 10.1% while online
sales, which contributed 1.8% to retail sales, increased 2.9%
during the Period, with a strong growth of 10.5% in December.
Group retail selling price (RSP) inflation of 4.9% was well managed
below CPI, despite more full-price items being sold as fewer
markdowns were actioned in comparison to the prior year. Total
unit sales increased 5.0% to 105.4m.
The store footprint increased by 85 new stores and the group's
total footprint expanded to 2 892 stores. Trading space increased
7.1% on a weighted average basis and 6.2% on a closing basis.
Cash sales, which constitute 90.4% of total retail sales, increased
10.5%. Credit sales increased 4.6% as the group's strict credit
granting criteria continued.
Retail sales in the Apparel segment grew 11.7%. The group's largest
division, Mr Price Apparel, reported strong double-digit sales
growth and gained 150bps of market share, supported by the gain of
220bps in December. The division has now gained market share for
five consecutive months. While sales growth was generally strong
across all merchandise departments, the performance of kids was a
standout and continues to bode well for the new Mr Price Kids
concept, which now has 30 stores, and has the potential to be a
significant retail chain in the group.
The acquired apparel businesses continued to perform ahead of the
market - Power Fashion delivered double-digit sales growth, gained
30bps of market share and achieved its highest market share level
on record in December. Studio 88 grew sales by high single-digits
during the Period against a very strong base.
The Home segment's retail sales growth improved monthly throughout
the quarter, with performances in Mr Price Home and Sheet Street
increasing to mid-single digit sales growth levels in December
2023. Yuppiechef continued to report double digit sales growth.
The Telecoms segment grew retail sales 9.0% and increased its
market share by 70bps to its highest level on record, according to
GfK (November 2023 latest data available).
Other income decreased 16.3% to R301m due to the 2021 civil unrest
insurance claim received in Q3 FY2023. Excluding this once off
receipt, other income increased 7.0%, supported by higher debtors'
interest and fees from the group's retail debtors' book.
Closing inventory was 1.9% lower than the corresponding period.
Outlook
The South African GDP growth outlook for 2024 is likely to be
constrained. The first half of the year is anticipated to remain
challenging for consumers, although this could improve in the
second half if inflation continues to moderate and interest rates
start retracting.
Although it was the group's intention to reflect negative stock
growth at its March year end, this result is dependent on the
outcomes of supply chain challenges:
- The Durban port congestion was disruptive to festive season
trade, and this situation is expected to continue until the
core challenges are successfully remedied. Currently the
elevated level of risk has subsided slightly due to lower
port demand post the festive season.
- The instability of the Red Sea shipping route is increasing
transit times. This has also resulted in increased shipping
rates, however the group's rates are contracted until June.
The group will continue to take the necessary action to mitigate
the impact of these risks on trade.
Management continues to focus on delivering profitable market
share gains, by building on comparable sales growth momentum in
its core business and ensuring that the acquired businesses keep
performing and building scale.
The above-mentioned figures and information contained herein do
not constitute an earnings forecast or estimate and have not been
reviewed and reported on by the Company's external auditors.
Durban
25 January 2024
JSE Equity Sponsor and Corporate Broker
Investec Bank Limited
Date: 25-01-2024 07:05:00
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