Showing its mettle

Nobody would expect a retailer to be shooting the lights out in the current environment, but Mr Price has put in a steady performance under what it describes as conditions of unprecedented operational disruption and significant uncertainty.

Sales unavoidably fell off a cliff with all its stores closed in April. But since lockdown restrictions have been eased Mr Price has seen high levels of pent-up demand unleashed as the customers have put their backs into sparking an economic rebound.

Mr Price points to a number of short-term factors that have driven this spike, and cautions that negative GDP and retail sales growth outlooks, as well as rising unemployment, suggest that it is likely to be temporary. So it is keeping a close eye on its order book and stock levels.

The group’s online sales rose by 90.1% in the period, while in the real world, smaller-format stores outperformed major regional centres as customers opted for convenience.

Now the key is to position the group for the new environment. Mr Price has identified R300m of expense reduction that can be implemented, but it is also looking at organic growth and acquisitions. It has announced its plans for a significant capital raise to give it the firepower to respond quickly to opportunities that arrive, and it believes that its cash-based, fashion-value model will go down well with consumers in a constrained economic environment.

Tellingly, it suggests that a company’s values come through when trade is at its toughest, and it seems to be up for the test.

Mr Price has plans for a significant capital raise to give it the firepower to respond to opportunities