Retail sales for the 26 weeks ended 28 September 2013 increased by 14.6% to R6.9 billion. Sales in like-for-like locations (comparable sales) were up by 9.6%. For the five months to August 2013, as reported by Stats SA, total retail sales growth was 7.3% and retailers in textiles clothing and footwear was 10.6%.
“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%. We have been loyal to our cash model and 79.2% of total sales were for cash,” said CEO Stuart Bird.
“Despite tapping-off on credit, our largest chain, Mr Price Apparel, which represents 55.5% of Group sales, achieved strong market share gains, which is proof that our merchandise offer hit the mark,” added Bird.
A weak currency, which affects all retailers, resulted in retail selling price inflation increasing by 8.3% and units sold increased by 5.8% to over 97.5 million units. The opening of 24 new and the closing of 12 stores resulted in net closing trading space increasing by 3.1% (September 2012 to September 2013).
“Although ongoing space rationalisation (closures and space reductions) continues to favourably impact profitability, we are still focused on adding good quality space (new stores and expansions) and new trading space added increased by 6.0%,” said Bird.
Other income increased by 22.6% as a result of interest on trade receivables rising by 20.6%, while financial services premium income was up by 43.0% and represents an ongoing growth opportunity.
The gross profit margin increased from 41.3% to 41.7% of retail sales. Selling and administrative expenses grew by 13.4%, a level below the increase in sales despite space growth, increased bad debts and investment costs being incurred to position the Group for future growth, which include:
E-commerce – Mr Price Apparel opening MRP.COM to international markets and Mr Price Home and Sheet Street building capacity to launch their local sites before the festive season;
Human capital management systems – a full HR suite which has resource scheduling as a core component to ensure that staff levels are commensurate with trading demands; and
ERP – the conversion from legacy systems to Oracle, with the implementation of the first trading division planned for mid-2014.
The Group has opened two new stores in Nigeria in the last six months, bringing the total to four. “We no longer view Nigeria and Ghana as test markets. Although a more efficient supply chain will in time enable us to lower selling prices and be very competitive in those markets, they are currently performing well and confirm their potential,” said Bird. “In addition, the online sales platform will represent a strong growth opportunity globally and will allow a cost effective test of foreign markets,” he added.
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Mr Price Group
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