Mr Price sales up 20,3% on clothing

Fashion and homeware retailer Mr Price reported a 20,3% rise in third-quarter sales on Wednesday as it sold more clothes and opened new stores.

The company said in a statement like-for-like sales, which includes sales of expanded stores but not new ones, rose 15,3% and said prices increased about 6.3 percent during the three months to end December, inflating the top line.

The core clothing unit, which accounted for 72% of sales, notched up a 25,7% increase and like-for-like growth of 21,8%.

South African retailers have been struggling as consumers rein in spending to cope with relatively high interest rates and inflation.

But retailers like Mr Price that target the lower end of the market have fared better than more upscale rivals such as Truworths or Foschini, as hard-pressed customers opt for cheaper products. Inflation has also lifted sales.

Mr Price, which said sales rose 21,4% in December and 17,5% on a comparable basis, is the first clothing retailer to report post-Christmas sales figures.

The figures are likely to be closely watched for signs of how the South African economy is holding up, as a consumer recession raises pressure on the central bank to cut interest rates further.

Latest figures show South African retail sales fell for the sixth month in a row in October, likely helping influence the central bank’s decision to cut its repo rate by 50 basis points to 11,5% in December. Economists expect more aggressive cuts this year.

Africa’s biggest supermarket group Shoprite Holdings Ltd reported a 27% increase in first-half turnover on Tuesday, and its Pick ‘n Pay has said Christmas sales exceeded expectations, with December sales growth in the “mid teens” percent.

Mr Price said its home division, which represented 28% of total turnover, had a tougher time as shoppers cut back on bigger ticket items.
Sales increased 8,2%, or 1,7% on a comparable basis.

The company said its debtors book was under control, with bad debts in line with the level reported at the end of the first six months.

Shares in Mr Price closed at R26 on Tuesday. - Reuters

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