By Kamlesh Bhuckory and Janice Kew
Mr Price Group Ltd. (MPC) said first-half profit increased 23 percent as the clothing and homeware retailer’s focus on cash sales helped offset weaker consumer spending in South Africa.
Net income was 921 million rand ($82.8 million) in the six months through Sept. 27, compared with 747 million rand a year earlier, the Durban-based company said in a statement today. Sales increased 15 percent to 8.3 billion rand. The company raised the half-year dividend 26 percent to 211.5 cents.
South African retailers have struggled this year as strikes and unemployment of more than 25 percent constrain consumer spending. Companies that offer sales on credit have been particularly vulnerable, as customers on lower-to-middle incomes fail to repay loans. Mr Price cash sales gained 18 percent in the period, and made up 81 percent of the total.
“I’d expect the credit contribution to carry on slowing down relative to cash sales growth,” Chief Financial Officer Mark Blair said by phone. “As we go into new markets beyond South Africa it’s all for cash. We are not relying on credit for growth.”
The shares declined 0.2 percent to 244 rand at the close in Johannesburg after a 3.1 percent gain on Nov. 14. The stock has jumped 49 percent this year, the best performer on the FTSE/JSE Africa General Retailers Index.
Mr Price plans to accelerate store openings in the six months ending March with 41 new outlets, Blair said. That compares with 36 in the first half. About 50 percent of those will be the company’s Apparel brand and six to eight will be outside its domestic market, he said.
The company has operations in Nigeria, Ghana and Zambia as well as South Africa.-Bloomberg
To contact the reporters on this story: Janice Kew in Johannesburg at [email protected]; Kamlesh Bhuckory in Johannesburg at [email protected]
To contact the editors responsible for this story: Celeste Perri at [email protected] John Bowker, Robert Valpuesta
