Mr Price on Thursday (22 November) released its interim results for the 26 weeks ended 29 September 2018, showing strong growth in its mobile and online divisions.
Headline earnings per share (HEPS) and dividends per share (DPS) increased by 11.6% to 494.3 cents and 311.4 cents respectively. Diluted headline earnings per share increased by 11.1% to 482.4 cents.
“Sales growth in our apparel and homeware segments were ahead of the market for the period, a positive indication of market share gains. To deliver double digit earnings and dividend growths in a tough economic and retail environment is a pleasing result,” said CFO Mark Blair.
Total revenue grew 7.8% to R10.5 billion supported by retail sales growth of 6.6% (comparable stores 3.9%) to R9.7 billion.
Other income, mainly from financial services and cellular, grew 24.7% to R801 million. Cellular and mobile income specifically, grew to R296 million, from R195 million – an increase of 52.3%.
Cellular products are now sold through 249 locations across the group and its centralised call centre, Mr Price said.
Mr Price launched its mobile virtual network operator (MVNO), some four years ago. It uses Cell C‘s network, offering deals on airtime, data, handsets.
Cash sales which constitute 83.4% of total sales grew 7.5% while credit sales increased 2.2%. Local retail sales increased 6.2% while non-South African sales grew 11.4%, aided by the acquisition of the Kenyan franchise stores in May 2018.
By opening 34 new stores and expanding 2, weighted average space grew by 3.7%. After closing 6 and reducing the size of 13 stores, net weighted average space growth was 1.4%, taking the total number of corporate owned stores to 1,286.
Merchandise and cellular gross margin gains contributed to the group, improving its gross profit margin by 60bps to 42.6%. Merchandise margins improved 80bps to 43.3% as continued product execution resulted in more full priced items sold and lower markdowns.
Cellular margins increased 30bps to 19.1%.
Mr Price said that online sales grew at 31.6%, supporting the omni channel strategy. MRP Sport reported improved performance with sales growth of 7.3%, with online sales growing at 40.4%.
“Declining GDP growth in South Africa and rising fiscal challenges, as noted in the most recent medium term budget speech, points to further challenging trading conditions ahead for South African retailers. Despite this, we remain confident that our fashion value business model is well positioned to capture further market share,” Blair said.