The next few months will show how badly lockdown really hit South Africans: Mr Price

The Mr Price Group expects the global economy to see a recovery in 2021, off the low base created by Covid-19 and associated lockdowns.

The group, which published its annual results on Thursday (27 May), said it only expects a full recovery to pre-pandemic levels in 2023 across most nations.

It added that the true state of consumer finances in South Africa will likely be revealed in the coming months as government benefits end and the road to recovery starts.

“South Africa experienced fiscal distress due to Covid-19 which impacted domestic demand. However, this was softened by temporary relief measures provided by the government, the brought the TERS and Covid-19 relief grant, and private sector credit providers.

“These relief measures have largely come to an end and the true state of the consumer environment is most likely to be revealed in the short to medium term.”

The group said that it has benefitted from consumers receiving short term financial assistance, but believes that the primary reason for its outperformance since the level 5 lockdown is due to its superior merchandise assortment and strong value offering to customers.

Results

The group’s full-year 2021 year-end results for the 53 weeks ended 3 April 2021 showed HEPS increased 2% to 1 067.9 cents.

Diluted HEPS increased 1.9% to 1 049.0 cents and basic earnings per share decreased 1.8% to 1 023.6 cents impacted by a once-off impairment of intangible IT assets in the first half of the year.

Total revenue from continuing operations decreased 2.9% to R22.3 billion with retail sales decreasing 2.4% to R21.2 billion. In H2, retail sales increased 8.5% and the group gained 180bps of market share.

Profit from operating activities decreased 7.3% to R3.7bn, significantly affected by restrictions in H1 and operating margin declined 80bps to 16.7% of retail sales and other income.

Annually, other income decreased 15.7% to R860 million, negatively impacted by lower credit sales, attrition in insurance premiums and repo rate cuts of 275bps (since January 2020) impacting interest earned on the credit book.

The other key highlights from the period were:

  • Grew market share by 150bps according to Retailers’ Liaison Committee, the equivalent of R1.2 billion
  • Group gained market share every quarter, Mr Price Apparel gained market share for all months in the period
  • Delivered approximately R500 million in new merchandise sales through organically launched departments
  • Online sales channel grew 64.1% almost doubling in contribution to 2.4% of group sales
  • Retail sales accelerated by 8.5% in H2, with both the Home and Telecom segments achieving double-digit growth

Read: Ster Kinekor expects people will return to cinemas by the end of the year

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The next few months will show how badly lockdown really hit South Africans: Mr Price