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Mr Price profit up by 16%

Fashion and home goods retailer Mr Price said profit per share for the year to end-March rose 16% and it expected to gain market share as shoppers opt for its low-cost products.

However, the company forecast challenging trading conditions ahead as the first recession in 17 years hits consumer confidence in Africa’s biggest economy.

The company said diluted headline earnings per share for the year rose 16% to 244,6 cents. Retail sales rose 19,3% to R8,6-billion.

”Not a bad result at all … I think they’re definitely taking some market share at this point in time,” said Abri Du Plessis, chief investment officer at Gryphon Asset Management.

”The one negative is that expenses are up quite a bit … [but] they’re probably positioning themselves aggressively in the market to take some more market share where the other guys are scaling down.”

Mr Price shares had gained 3,4% to R27,40 by 7.53am GMT, outpacing a firmer JSE All-share index.

The group said it had opened 58 new stores during the year, resulting in the creation of 400 full-time jobs. Sales at its core clothing unit climbed 24% to R4,5-billion.

Local retailers have been struggling as consumers in Africa’s biggest economy rein in spending to cope with relatively high interest rates and inflation.

South Africa slid into its first recession in 17 years in the first three months of 2009 and the Treasury said on Tuesday it expected the economy to shrink again in the second quarter.

But retailers like Mr Price that target the lower end of the market are faring better than more upscale rivals such as Truworths or Foschini, as hard-pressed customers opt for cheaper products.

The group said it expected to capture further market share in this financial year. It declared a final dividend of 92,8 cents. – Reuters

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