Mr Price shares surge on trading update
THE SHARE price of Mr Price surged more than 8 percent yesterday after it said it expected its profits for the six months to end September to rise by as much as 25 percent on the back of a resurgence from the group’s MRP Apparel and Miladys units.
The share price closed 8.61 percent higher at R192.29 on the JSE yesterday. The group said it expected its interim financial results for the period to be released later this month.
“Mr Price Group is currently finalising its interim financial results for the six months ended September 30, 2017. In this regard, shareholders are advised that earnings are likely to be between 20 percent and 25 percent higher than those reported for the previous corresponding reporting period,” the company said.
In September, the retailer said its two divisions – MRP Apparel and Miladys – were projected to contribute positively to the group’s expected improvement in gross profit margin for the six months to end September, buoyed by their improved trading and inventory performance.
The two divisions had punched below their weight the previous financial year, and Mr Price has been aggressively working at regaining their lost market share. Mr Price earlier this year singled out MRP Apparel and Miladys as its underperforming units in the year ended April, but added that the new financial year presented new hope, with the best sales performances coming from these two units.
An EY analysis last month showed that South Africa’s largest retailers were on a firm footing in the first half of the year, with retail profits up 4.9 percent in absolute terms compared to a 2.9 percent contraction recorded in the last six months of last year.
Some of the positive retail metrics noted by EY include a growing appetite to roll out more new stores and falling product inflation, supported by a stronger currency and a turnaround in food production.
On the negative side, EY said some of the challenges facing the sector were declining return on equity and continued margin squeeze.
Mr Price said it expected its basic earnings between 434.2 cents to 452.3c a share in the period under review, from the 361.8c a share recorded in the comparative period.
The basic headline earnings per share were expected to surge in the range of 434.8c to 452.9c a share, compared to the 362.3c posted in the comparative period.
The group expects its diluted earnings per share to spike to between 420.8c to 438.4c a share, from the 350.7c registered in the comparative period. Diluted headline earnings per share were expected to surge in the range of 421.4c to 439c per share, compared to 351.2c a share posted in the comparative reporting period.
Early this year, the group reported a decrease of 10.4 percent in its diluted headline earnings for the year ended April compared to the previous year. This was the first decline in the group’s profit in 16 years. Mr Price attributed the losses to last year’s warm winter as well as promotional markdowns by competitors to clear stock.