Focus on being fashionable as well as affordable boosts Mr Price
VALUE retailer Mr Price's shares surged 7 percent on the JSE yesterday as it reported a recovery from the Covid-19induced slump and market share gains despite the supply crunch experienced during the half-year to October 2021.
The shares surged after the release of the results to a high of R202.21, later closing the day at R196 on the JSE. The group recorded a 37.8 percent growth in retail sales during the 26 weeks ended October, up from 17.4 percent in the same period last year on the back of market share gains led by the apparel and footwear divisions.
Mr Price Apparel recorded a 42.3 percent growth in sales and has been gaining market share for 19 consecutive months.
Chief executive Mark Blair said in spite of the ongoing external challenges, the group's market share gains highlighted the defensive nature of its business model through its compelling customer value proposition. “The differentiation that it offers its customers through its merchandise fashionability is highlighted by its largest division, Mr Price Apparel, gaining market share for 19 consecutive months,” he said.
Blair said despite supply disruptions as a result of Covid-19, the group had entered the high summer season between October and December 2021 with fresh and available stock. This was made possible by the high volume of units sourced in South Africa.
Blair said the group would keep a close eye on inflation. “The group has advanced hedging policies, covering both exchange and freight rate contracts, giving it comfort that it has secured highly competitive rates, enabling it to make the best possible commercial decisions regarding inflation and margins,” he said.
Mr Price said online sales growth of 49.9 percent was against a high growth rate of 48.7 percent a year earlier due to Covid-19-related increased demand.
Online sales continued to increase in retail sales contributions, up to 2.9 percent and 2.7 percent excluding acquisitions, said Mr Price.
Commenting on the results Euromonitor analyst Steven O'Ehley said the recent performance of Mr Price had largely been driven by the resilience of the value segment with the South African footwear and apparel market.
He said Covid-19 had caused a downturn in the South African economy and rising unemployment. As consumers faced economic hardship and uncertainty, they had sought out value offerings within the market.
“The offerings available at Mr Price, focus on being fashionable and affordable. This has meant that Mr Price has remained resilient during tough economic conditions. Another factor driving Mr Price's results as an outcome of Covid-19 is the growth of the homeware sector,” he said. O'Ehley said as people continued to stay at home, they had invested in making their homes an enjoyable and pleasant place to be, benefiting Mr Price Home and Sheet Street.
“The value offered by Mr Price in both the homeware and fashion markets has seen it gain market share against its competitors,” he said.
O'Ehley said the group's resilience and recovery had been aided by the the strong performance of their e-commerce offering.