R220 million load shedding pain for Mr Price

Mr Price has seen its revenue increase despite load shedding costing it an estimated R200 million.

The group’s results for the financial year ended 30 March 2024 showed that revenue increased by 15.5% to R37.9 billion.

This includes the group acquiring Studio 88 Group (S88), effective 4 October 2022 (not in the
base in H1 FY2024), excluding which revenue grew 5.8% to R30.3 billion.

With the group growing its annual market share by 30bps, its operating profit exceeded R5 billion for the first time.

Basic and headline earnings per share increased by 5.4% and 6.7% to 1,276.2 cents and 1,286.2 cents, respectively.

The group also declared a final dividend of 526.8 cents per share, up 17.8%, bringing the total dividend up by 6.7% to 810.3 cents per share.

“Over the last year, we have had a great deal to contend with. Despite the challenges, our team has remained focused on execution while remaining agile in responding to the volatility of the trading environment, which has reflected in the performance of the second half,” said CEO Mark Blair.

“By focusing on delivering value to our customers, the group has strengthened its market position, as evidenced by gaining market share for seven consecutive months at better margins.”

Problems included the estimated 65,000 trading hours lost to load shedding, roughly R226 million in revenue.

However, the group said that the impact was mainly in the first half of the year, as the group reached 100% backup power by the end of Q1.

Global and domestic supply chain challenges also caused challenges for optimal inventory management.

“These challenges were faced amidst the backdrop of a weak consumer environment as elevated inflation levels continued to impact the low to middle-income households (the group’s core customer base) the most.”

That said, group retail sales still grew 16.2% to R36.6 billion, and comparable store sales increased by 1.8%. Excluding S88, retail sales grew by 6.2%.

Outlook

The group said that winter’s later arrival this year resulted in subdued trade in the first two months of FY2025.

Nevertheless, the group still gained market share in April 2024, and sales growth recovered strongly in early June as winter started.

“Supply chain challenges in the form of port inefficiency and increasing shipping costs will add pressure in the short term,” said the group.

“However, the acquisition of port equipment by Transnet, which will take some time to become operational, is encouraging.”

“In the forthcoming year the group will focus on its existing operations, raising customer service levels, and investing appropriately to ensure that their overall experience meets their expectations. Forecast capital expenditure for FY2025 is anticipated to be approximately R1.0bn and 200 new stores.”

Consumer relief is also expected in the latter half of the year as inflation moderates, interest rates decrease, and introducing the two-pot retirement system allows South Africans to access some of their retirement savings.

In addition, a stronger rand could add to consumer respite, even if this depends on the government coalition following the general elections.

“A market-friendly outcome has strong potential to elevate South Africa to a new growth path, making a significant impact in reducing unemployment and stimulating the economy,” said the group.

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