Mr Price has released its final results for the year ended March 2019, showing how much money its mobile virtual network operator is making, five years after launch.
The retailer said that cellular and mobile revenue grew 62.1% to R677 million with cellular products sold through 216 locations across the group. Mr Price uses Cell C‘s network, offering deals on airtime, data, and handsets.
Overall headline earnings per share (HEPS) and dividends per share (DPS) increased by 6.2% to 1 168.6 cents and 736.2 cents respectively. Diluted headline earnings per share increased by 6.2% to 1,142.3 cents.
“We are pleased to be able to deliver solid earnings growth and increase our dividend to shareholders in what has been a very tough year for retail. Despite this, both our apparel and homeware segments outperformed the market and gained market share on an annual basis. For the first time our retail sales exceeded R20 billion and profit before tax R4 billion,” said CEO Mark Blair.
Total revenue grew 5.8% to R22.6 billion with retail sales increasing by 4.4% (comparable stores 1.6%) to R20.9 billion. Other income grew 24.7% to R1.5 billion, mainly from financial services and cellular, Mr Price said.
Retail selling price inflation was 5.1% and 220 million units were sold, an increase of 0.2%.
“By opening 82 new stores and expanding 11, weighted average new space grew 3.1%. After closing 17 stores and reducing the size of 30, total weighted average space was up 1.4%, taking the total number of corporate owned stores to 1,323,” it said.
Cellular margins decreased 150bps to 19.1% due to product mix changes as Cellular kiosks, which are lower margin than MRP Mobile, were rolled out to over 200 stores.
Looking ahead, the group said it expects to open 70 new stores in FY2020.
The group said it recorded 36 million visits to divisional websites over the reporting period, while active app users increased by 47%, and new users increased YOY by 44%. It further noted that the online basket size exceeds store basket size on average by 50%
The retail environment in South Africa is likely to remain under pressure in the short term as flat real wage growth and low levels of disposable income continue to challenge the consumers’ ability to spend,” Blair said.
The national elections delivered a positive outcome which we hope will lead to reformed economic policies that will encourage business growth and job creation.
“Hopefully this could be the start of an upward swing in the retail cycle, but any improvements are expected to be gradual and we are therefore anticipating a very tough first half of the new financial year. The second half should see an improvement due to the base effect and impact of internal initiatives coming through,” he said.