Mr Price posts first drop in 16 years

The Witness - - YOU MONEY -

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.

— Reuters.

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