Mr Price sees strong Q1 sales growth

JSE-listed retailer Mr Price (MRP) reported a 4.6% increase in retail sales for the first quarter of the financial year ending 29 March 2025, reaching R8.5 billion.

According to the Retailers’ Liaison Committee (RCL), the group boosted its market share by 90 basis points, outperforming the overall market, which saw a 0.2% decline and four straight months of sales drops up to May 2024.

Other income grew by 9.3% to R321 million due to a higher average debtors’ book, and debtors’ interest and fees rose by 6.6%.

In South Africa, retail sales grew by 4.3% to R7.8 billion, while sales from non-South African corporate-owned stores increased by 8.5% to R668 million. Total store sales grew by 4.6%, and online sales, which contributed 2.4% to total retail sales, rose by 3.8%, accelerating to double-digit levels in June 2024, driven by Mr Price Apparel. The group noted that its e-commerce strategy remains focused on a blended retail offering, combining online browsing and in-store purchasing.

Group retail selling price (RSP) inflation was managed at 2.2% despite lower markdowns, which led to an increase in full-priced sales. Total unit sales increased by 2.4%.

Mr Price expanded its store footprint by 35 stores, bringing the total to 2 935 stores, with weighted average trading space increasing by 5.4%.

Cash sales, making up 87.5% of total retail sales, increased by 5.2%, while credit sales rose by 0.3%. Demand for new accounts was high, up 42.7%, but the approval rate remained muted at 18.7%, reflecting a cautious approach to credit granting in a challenging consumer environment.

The group focused on stock management, ensuring a clean inventory position at the end of winter and a smooth transition into spring/summer with fresh merchandise inputs.

In its annual results outlook, the group reported that trade in April and May 2024, the first two months of FY2025, was subdued due to multiple factors including high interest rates, increasing debt, elevated food inflation, the shift of Easter and school holidays into March 2024, higher temperatures delaying winter merchandise purchases, and consumers withholding spending in anticipation of the national elections.

Despite this, the group achieved a 0.9% increase in retail sales, compared to the market’s 4.6% decline. In June, retail sales growth accelerated to 12.7%, outpacing the market’s 10.3% growth, driven by pent-up demand for winter merchandise and positive consumer sentiment following the formation of the Government of National Unity.

These positive sales trends were consistent across all trading segments. Every division achieved gross margin percentage increases due to fewer markdowns, resulting in more full-priced merchandise sales, aligning with the group’s focus on profitable market share gains. The three recent acquisitions delivered the highest sales growth in the business.

The Apparel segment saw a 4.4% quarterly retail sales growth, which accelerated to 13.6% in June. Mr Price Apparel gained market share for the 11th consecutive month.

Mr Price Kids gained 60bps in market share, aided by standalone concept expansion. Homeware sales grew 3.7%, with all chains gaining market share in June 2024. The telecoms segment saw a 13.3% sales increase, achieving a new market share high.

The group believes South Africa’s prospects are improving due to a favourable election outcome, over 100 days without load shedding, and a recovery in consumer confidence. However, challenges remain until relief factors, such as lower inflation and interest rate cuts, take effect towards the end of 2024 and into 2025.

Mr Price says management continues to focus on profitable market share gains and positioning brands for consumer recovery. – bbc.com