Mr Price posts first drop in 16 years
MR Price Group posted a 12% drop in fullyear earnings, the fir st drop in annual profit since 2001, as consumers struggle in a sluggish economy.
The nofrills r etailer, which also sells homeware and furniture, is facing increased competition from international chains Zara, H&M and Cotton On and has los t mar ket share as local c ompetitors, such as the ailing Edcon, mark down stock.
“This was the group’s first earnings decrease in 1 6 years during a very difficult tr ading period,” said chief executive Stuart Bir d.
Mr Price blamed a dr op in sale s on weak consumer sentiment as political turmoil culminat ed in P resident J acob Zuma firing F inance minister Pravin Gordhan in March, and cr edit r atings agencies downgraded the nation t o subin vestment grade shortly after.
“Cabinet r eshuffles and do wngrades by r atings ag encies ha ve caused further exchange rate volatility, which the consumer ultimately has to absorb,” the c ompany said.
Mr Price, which has grown over three decades by undercutting competitors and cat ering t o thrift y shoppers’ fashion needs, said a mild winter caused rivals to mark down stock to match its own prices, further weighing on sale s.
Edcon, an unlis ted r etailer, has had to restructure debt and clear old stock at much lo wer prices.
Woolworths also mar ked down stock in what its chief executive Ian Moir described as a “f eeding frenzy”.
“The retail environment has become more c ompetitive, with an y growth in a stagnant market coming from incr eased mar ket shar e,” Mr Price said.
Diluted headline earning s per share fell to 887,9 cents in the year to endMarch, from 1 012,9 cents in the previous year.
Mr Price maintained its fullyear dividend at 66 7 cents per shar e.
The company said improvement in the consumer environment is likely only to be gradual, but added that it was seeing enc ouraging signs in the current financial y ear.