Resilient Mr Price delivers profit growth as shoppers tighten belts

Key topics:Earnings and dividend up 6.5% as margins and cash position strengthenApparel, Homeware and Telecoms outperform, with strong online growthConsumer environment remains fragile with volatile, highly promotional tradeSign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..BizNews Reporter.Mr Price Group has posted a resilient set of interim results for the 26 weeks ended 27 September 2025, delivering earnings growth and improved profitability despite operating in what it describes as an exceptionally constrained and volatile consumer environment. The value-focused retailer continued to outperform the broader market, supported by disciplined cost control, tight inventory management and steady demand in its core categories.The group grew revenue, earnings and dividends in the period, underscoring what management says is the strength of its strategy to prioritise sales growth while protecting margins. Headline earnings per share rose 6.5% to 513.0 cents, with diluted HEPS up 6.4%. An interim dividend of 323.2 cents per share was declared, also 6.5% higher, maintaining the long-term 63% pay-out ratio.Profitability strengthened across key metrics. Gross profit margin improved by 30 basis points to 40.0%, helped by data-led inventory planning that enabled a smooth shift out of winter stock into new-season merchandise. Expense growth was contained at 5.6%, generating positive operating leverage and a 10-bps lift in the operating margin to 11.5%. Operating profit increased 5.7% to R2.1 billion.Group revenue grew 5.4% to R18.6 billion, with retail sales up 5.5% to R17.8 billion—slightly ahead of the comparable market’s 5.3% growth. Comparable store sales rose 2.1%. The group’s omni-channel execution delivered another strong performance: online sales grew 9.7%, almost double the rate of in-store sales. Mr Price opened 91 stores during the period, increasing its footprint to 3,100, and expanded trading space by 3.5%.Segment performanceApparel, the group’s largest division, lifted retail sales 5.3% to R14 billion, outperforming the market’s 4.7% growth. Power Fashion delivered its 14th consecutive quarter of market share gains, while Studio 88 contributed margin-accretive sales.Telecoms remained a standout performer, with sales rising 12.4% to R678 million and market share increasing by 50 basis points.Homeware sales rose 5.1% to R3.2 billion. All homeware divisions expanded gross margins, while Yuppiechef maintained strong momentum with double-digit sales growth and 18 consecutive months of market share gains.Mr Price ended the period debt-free, holding R3 billion in cash. Cash conversion was robust at 81.8%.Consumer headwinds remain severeDespite the positive results, Mr Price flagged a deeply pressured trading backdrop marked by constrained disposable incomes, weak consumer confidence and highly promotional retail conditions. The lingering impact of negative real wage growth since 2022 continues to restrict spending capacity.Trading volatility was evident in quarterly trends. First-quarter sales grew 6.3% but required markdowns in June, compressing gross margin by 20 bps. The second quarter delivered 4.7% sales growth—only in line with the broader market’s heavily discounted trading period—but Mr Price managed to expand margins by driving sales of fresh, full-price spring and summer items.The only soft spot in the portfolio was Financial Services, where revenue dipped 0.8% to R469 million, largely due to a 100-bps drop in the repo rate versus the prior period.Outlook: ‘Fragile’ consumer environment, tougher base aheadThe group cautioned that the operating environment remains “fragile,” with spending patterns expected to stay volatile due to elevated food inflation and continued pressure on discretionary income. The comparative base for the second half is particularly demanding, given last year’s boost from improving affordability and “two-pot” retirement withdrawals ahead of the festive season. Sales in the first seven weeks of H2 rose 3.3% against a strong 12.3% prior-year growth rate.Despite these headwinds, CEO Mark Blair expressed confidence in the retailer’s ability to continue posting consistent earnings. The group remains focused on strategic research to guide future capital allocation, including assessing both organic expansion and acquisitive opportunities..Read the results in full by downloading the PDF below

Resilient Mr Price delivers profit growth as shoppers tighten belts

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