Mr Price warns over impact of stage 6 load shedding

Value retailer Mr Price on Friday (17 January) reported a 3.5% increase in group sales for the quarter ended December 2019, with its Christmas traffic ‘materially affected by stage six rolling power blackouts’.

While South Africans have become accustomed to Eskom’s load-shedding in recent months, the state utility implemented stage 6 load-shedding for the first time in mid-December. Municipalities have since updated their schedules for load shedding stages has high as stage 8.

According to Eskom, load-shedding is a controlled way to make sure the national power grid remains stable. “The higher the load-shedding stage, the more frequent you will experiencing load-shedding.

“The higher the stage, the greater the number of customers who will be affected across the country. Generally, load-shedding in stage 8 will result in customers having electricity for 50% of the day.”

During the third quarter (29 September 2019 to 28 December 2019) of the financial year ending March 2020, Mr Price recorded growth in retail sales and other income (RSOI) of 3.5% to R7.4 billion.

Corporate-owned and franchise stores generated total retail sales of R7.0 billion, an increase of 3.3%, it said in a statement.

In October, the group said it gained market share despite retail sales growth being muted at 0.3%. Trade was affected by a shift in school holidays into September and the Rugby World Cup.

The group said it continued to gain market share in November, an increasingly key trading month because of Black Friday. “This has changed consumer spending habits prior to Christmas,” Mr Price said.

“Business activity in key weeks in December was materially affected by stage six rolling power blackouts and prolonged periods of torrential rain in the inland areas, partially diluting the anticipated impact of the extra week of school holidays.”

The combined retail sales growth of these two months was 4.7%, with gross margin in line with the same period last year.

Mr Price said that the home businesses have felt the effect of lower growth in household expenditure, particularly on discretionary items. “Despite this, both divisions continue to find opportunities to deliver superior value to their customers,” it said.

South African retail sales grew 3.9% to R6.4 billion. Store sales were up 3.7% and online sales were up 17.4%, it said.

The retailer, which also deals as a mobile virtual network operator, said that other income grew by 6.5% to R438 million supported by double digit growth in mobile and cellular. The in-store cellular kiosks are now in 259 stores, it said.

Mr Price said that consumers continue to be constrained, highlighted by the BER Consumer Confidence Index remaining negative at -7 index points in Q4 2019.

“The group sees this as an opportunity to continue gaining market share and building on the improved performance in Q3, by offering quality merchandise at everyday low prices,” it said.

Shares in Mr Price declined in mid-morning trade on Friday, down 4% to R184.50.

Read: Mr Price online sales soar as apparel division disappoints

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Mr Price warns over impact of stage 6 load shedding