Listed retailer Mr Price has reported a 52% rise in diluted headline earnings per share (HEPS) for the six months to end-September 2005 to 46,5 cents from 30,6 cents a year earlier.
The company declared an interim distribution of 24,3 cents per share, up from 13,2 cents at the halfway point in 2004, reducing its distribution cover to two times earnings from 2,4 times in the year-earlier period.
Announcing its interim results on Thursday, Mr Price said revenue rose 18% to R2,36-billion from a re-stated R2-billion a year earlier, while revenue from continuing operations was 24% higher at R2,18-billion. The group’s prior-year results were re-stated due to the use of International Financial Reporting Standards (IFRS) for the first time.
Profit from operating activities — from continuing operations — rose 54% to R167,3-million from R108,9-million the previous year, and net profit from continuing operations, at R109,8-million, was up 58% on the R69,5-million recorded in the year-earlier period.
Net cash inflows from operating activities totalled R100-million, down
from R178,8-million previously, but cash and cash equivalents at period-end rose to R525,4-million versus R374,6-million.
CEO Alastair McArthur said that the sector as a whole had continued to benefit from the buoyant economic conditions and sustained strength in consumer spending. After an initial lag, cash retailers were now participating fully in the upturn.
The group had performed well in these conditions, recording good growth in revenue and operating profits.
Following the sale of The Hub and Galaxy Jewellers earlier in the year, the focus of the group’s continuing operations was now on four chains — Mr Price, Mr Price Home, Sheet Street and Miladys.
The group was continuing with its expansion plans, with average trading space in the continuing businesses having grown by 10% over the six months.
There were 732 stores in the continuing group at the interim stage.
The Mr Price chain had performed extremely well and had grown revenue by 22% with comparable sales growing by 20%. New and expanded departments had shown good results.
“The introduction of “Everyday” wear has effectively extended the offer of Mr Price from weekend wear to cover the rest of the week. The customer response to our smarter clothing ranges has been superb,” said McArthur.
Mr Price Home grew revenue by 26% with comparable sales up 16% and the introduction of furniture had been well received by customers. Two ultra-stores with trading areas over 2 000 square metres opened in August in KwaZulu Natal, followed by one in Gauteng in late September. Early results were very positive, McArthur noted, and a further ultra-store would be opening in Gauteng in late November.
Sheet Street increased revenues by 31% with comparable sales growth of 16%.
“Sheet Street has tightened its focus by eliminating lower-priced hard goods items and is trading very well. We have clearly delineated the playing fields in terms of target customers for Home and Sheet Street and each business is now a major brand in its respective niche in the market,” added McArthur.
Milady’s increased revenues by 21% with a comparable sales growth of 17%.
The coordination of ranges had been enhanced and more value introduced, while the Milady’s revamp programme is improving the total offer to customers.
Twenty one new stores were revamped in the first half and a further 29 will be renovated in the second half.
McArthur said the group’s balance sheet remained strong, with a further R182-million due to be received for the sale of The Hub and Galaxy divisions.
“The strong balance sheet is allowing us to grow our existing businesses aggressively and will fund the credit offer in the current cash retail chains.”
He added that the company’s expansion plans as unveiled at the previous year-end were still on track, with space due to be increased by another 50% over the next five years in order to resolve the current cramped conditions in many of its stores.
“Suggestions have been made in the past that our business was reaching saturation but this couldn’t be further from the truth,” the CEO commented.
“Our customers, buyers, market researchers and operations teams are all calling for less cramped and more spacious stores. Whenever we respond by expanding space, both sales and profits jump.”
Looking forward, McArthur said that trading in the first six weeks of the second half had been good.
“A favourable October normally indicates a good Christmas, so we are positive about the festive season. Although we have a higher base in the second half, we are well positioned to report a further growth in earnings at the end of the financial year,” he concluded. – I-Net Bridge