Retailer extremely worried over potential downgrades
MR PRICE was worried about political outcomes in South Africa and dreaded the potential downgrading of the country’s sovereign credit rating by Moody’s Investor Services and S&P Global Ratings on Friday, the retailer said yesterday.
Stuart Bird, the chief executive of Mr Price, said he was pleased the company posted robust results in the six months to the end of September, but cautioned on the impact of further downgrades of the country’s sovereign credit rating.
“The company is very concerned about the potential impact relating to sovereign rating reviews and political outcomes. However, the positive early signs of summer trading are encouraging, with October sales increasing 8.3 percent and further momentum being gained going into November,” Bird said.
Both Moody’s and S&P are expected to release their yearend credit reviews on South Africa this Friday. Moody’s has already said the medium-term budget policy statement presented last month signalled a change in policy direction that was credit negative.
Mr Price’s diluted headline earnings per share in the six months to the end of Septem- ber surged 23.6 percent to 434.1 cents. The group declared an interim dividend per share of 279c, up 22.3 percent from the comparative period.
The company’s total revenue rose 6.7 percent to R9.8 billion, while cash sales grew 7.2 percent and constitute 82.4 percent of total sales.
The group said the number of stores opened during the trading period increased by 24 to 1 240. The retailer, however, said its cellular division, MRP Mobile, reported a 5 percent drop in revenue in the period under review.
The group attributed a reduction in revenues to product mix changes that delivered higher profitability. MRP Mobile runs on a Cell C’s network since 2014.
In September, the group said its two divisions, MRP Apparel and Miladys, were expected to contribute positively to the group’s anticipated improvement in gross profit margin for the first half ending September 30, following their improved trading and inventory performance.
Yesterday, Mr Price said sales in MRP Apparel grew 10.2 percent to R5.6bn, while Milady’s saw its sales surge 11.9 percent to R651.8 million.
Bird said the results pointed to the resilience of the group’s business model.
“We successfully transitioned to our new distribution facility in Hammarsdale on time and within budget, and focus will now be aimed at realising the long-term financial benefits therefrom.”
Asief Mohamed, the chief investment officer at Aeon Investment Management, said Mr Price had recorded good results and the group’s new distribution centre would add further gloss to the company’s profits.
Mr Price shares rose 3.68 percent to close at R201.99 on the JSE yesterday.