Mr Price, the South African-based clothing and household goods retailer, said first-half profit gained 24% as it focused on customers paying in cash amid falling consumer confidence.
Net income in the six months through September 28 advanced to R747-million from R605-millon a year earlier, Mr Price said in a statement. Sales increased 15% to R7.2-billion.
"We focused on avoiding chasing credit sales to drive top- line growth and are pleased that cash sales growth of 15.1% exceeded credit sales growth of 11.6%," Mr Price said. "The performance is against a backdrop of low consumer confidence in a challenging retail environment, caused by slowing real wage and credit growth."
Consumer confidence in Africa’s largest economy dropped to a 10-year low in the third quarter as higher inflation curbed spending. Truworths, South Africa’s largest listed clothing retailer that generates 71% of its sales in credit, said last week that revenue growth slowed in the 18 weeks through November. Mr Price cash sales made up almost 80% of total revenue, the company said.
Mr Price shares rose as much as 2.8%, the most since October 28, and traded 2.6% higher at R150.98. The stock has gained 7.8% this year, compared with a 11% decline in the 11-member FTSE/JSE Africa General Retailers Index.
"Mr Price cash sales are high and this means they have been able to consistently put good results on the table," Henre Herselmanm, a derivatives trader at Nedbank, said. "These earnings are brilliant, considering the current retail sector sentiment."
The company raised its interim dividend 26% to R1.68 a share.
Mr Price opened two new stores in Nigeria during the six- month period, bringing its total in the West African country to four. Woolworths Holdings, the South African food-and- clothing retailer, said last week it plans to close its three stores in Africa’s most populous nation because of high rental costs and difficulties with its supply chain.
Stores in Nigeria and Ghana are "performing well", chief executive Stuart Bird said in the statement. Mr Price no longer sees the west African countries as test markets, he said. – Bloomberg