Mr Price fights back, buoyed by sales uptick, Allan Gray’s confidence

Key topics:Mr Price posts 3.6% Q3 sales growth, regains market share in SA.Allan Gray boosts stake to 10%, signalling confidence in the retailer.German acquisition dispute continues, but domestic operations remain strong..Sign 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..By BizNews Reporter.After a turbulent few months defined by a rejected offshore acquisition and a punishing share price collapse, Mr Price Group is showing signs of stabilising. In a voluntary trading update released today, the value retailer reported a 3.6% increase in retail sales to R15.1 billion for the third quarter ended 27 December 2025. While the growth is modest and points to quiet Festive Trading, it comes off a high base of 10.6% growth in the previous year amid a constrained consumer environment, where South Africans have prioritised debt servicing over new clothes.Crucially, the update suggests Mr Price is getting back to basics. The group confirmed it has gained market share in its core South African operations, outperforming the broader market's tepid 1.6% growth as measured by the Retailers’ Liaison Committee (RLC). This operational resilience appears to have caught the eye of smart money: recent regulatory filings reveal that Allan Gray, South Africa’s largest private investment manager, has quietly accumulated a 10% stake in the retailer..The German misadventure and the market's rebuke.Mr Price is currently locked in a tense standoff with shareholders over its ambitious attempt to acquire German retail group NKD earlier in the financial year. The proposed deal, which management argues will diversify earnings away from the volatile South African market, has been met with fierce scepticism by investors who fear it is a costly distraction from the core business.The market’s verdict has been swift and severe, with Mr Price’s share price plunging in the wake of the announcement. Despite the outcry, management has so far refused to walk away from the transaction. The subsequent entry of Allan Gray is therefore a significant development. The asset manager’s decision to increase its stake to 10% is widely interpreted not just as a value play, but potentially as a move to gain sufficient voting leverage to influence the outcome of this contested deal..Q3 Performance: Resilience in a tough climate.The numbers released today support the view that the underlying business remains sound. The group’s flagship Apparel segment grew sales by 3.2%, contributing over 83% of total retail sales. Notably, the Studio 88 division, acquired to boost Mr Price's footprint in the branded athleisure market, delivered a robust 12.3% sales jump in December.However, the "two-pot" retirement system, which allowed South Africans early access to pension savings, created a complex base effect. While the withdrawals boosted liquidity, much of that disposable income was diverted. Management noted that consumer spending was absorbed by high debt servicing costs and, increasingly, "online betting," rather than flowing into retail tills.Despite these headwinds, the group’s Telecoms segment was a standout performer, surging 11.0%, further entrenching the retailer’s strategy of capturing more of its customers' wallet share beyond clothing..Looking ahead.Management remains cautious but optimistic. While Gross Profit margins slipped 20 basis points in the quarter, the group expects to maintain margins for the full financial year ending March 2026. The update also points to a brightening macroeconomic horizon: lower inflation, anticipated interest rate cuts, and a stronger Rand are expected to support a consumer recovery in 2026.For shareholders, the combination of steady operational metrics and the backing of a heavyweight investor like Allan Gray may signal that the worst of the storm has passed. Should Mr Price abandon the German adventure and refocus on the domestic battlefield, the share price is sure to surge. Longer-term, though, the question is whether Mr Price can convert the strong underlying SA business into the kind of aggressive growth that made it a market darling in decades past.

Mr Price fights back, buoyed by sales uptick, Allan Gray’s confidence

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