Weather and rivals wrong-foot Mr Price
Warm winter, slow response to fashion trends threw retailer
CALLING in the fashion police may prove the only cure for the woes of clothing and homeware retailer Mr Price, which this week had to ease concerns of investors fretting over the fate of the one-time retail darling.
Award-winning fashion editor and stylist Jenny Andrew said Mr Price had lost its appeal.
She had gone into Mr Price this week “because it usually has everything that we want and we found that there was nothing that was blowing us away . . . that we had to invest in”, she said.
“I’m a huge Mr Price fan and I shop there regularly. They usually have one or two pieces that are irresistible, on trend and strong, and you feel you have to buy, and there was nothing that I’ve seen in the last couple of times that I’ve been in there.”
Mr Price’s fashion missteps have been one of the reasons the Durban-based retailer has seen its market share challenged by international entrants such as Australia’s Cotton On and Sweden’s H&M.
Apparel represents more than 70% of Mr Price’s revenue, according to Bloomberg data.
Its shares have plunged close to 20% since the end of August after the release of a less than stellar trading update that showed sales growth of 1%, while comparable sales were 2.4% weaker. This compares with the JSE All Share index that has declined just over a percent.
On Tuesday, group CEO Stuart Bird and chief financial officer Mark Blair hosted a 30minute conference call to ease shareholder concerns amid a fall in the group’s shares.
Bird blamed recent underperformance on competition and unseasonable weather.
“The scale of competitive activity was so great and prolonged that not moving early did cost us market share and our value was less apparent compared to all the sales goods that were available out there.”
He said there “were some product missed opportunities”, such as being underinvested in knitwear and jackets, but as a fashion retailer “those kind of things can happen and it’s certainly not something new or different”.
While Mr Price admitted that it took too long to respond to consumer needs, investors were not satisfied with management’s responses.
The call failed to put a lid on the falling share price, with Mr Price dropping a further 6.5% by the end of the week.
“It’s difficult for investors to quantify what type of issues were due to management errors and what part is due to foreign competition,” said Peter Takaendesa, an equity investment analyst with Mergence Investment Managers.
“We want to believe what they [Mr Price] are saying and it would be naive to think that it is only one thing and to put all the blame on management."
He added that the winter was warmer than was expected, but maybe as "we go into summer, provided that they don’t get their fashion call wrong, we could see things improving from a sales point of view”.
For fashion industry pundits, the Miladys brand has been the group’s Achilles heel and is often described by industry pundits as selling “old-lady brands” and failing to get the fashion mix right to attract younger consumers.
A fashion industry analyst, who works closely with the retailer and therefore did not want to be named, said the competition it faced certainly had an impact on the group’s performance.
Despite this, Mr Price “has had a good price point and it’s much more fashionable than your Ackermans or your Pick n Pays who are in the same price points”, the analyst said.
She said that “in terms of price points they [Mr Price] are much more affordable than your H&M, their price points are actually lower — that’s why I’m surprised that they are not doing well”.
But the analyst declined to comment on the Mildays brand, dismissively saying: “I really having nothing to do with Miladys; we work in fashion.”
When will the retailer return to its former glory? Not even the fashion gods know.
Andrew said Mr Price would have to work on its corporate identity because it was likely to “have a better perception in the market”.
She added: “I understand that they are planning to redesign it, that old red cap . . . they no longer want to be called Mr Price; they want to be called MRP, but somewhere along the line they have to get rid of the
❛ Somewhere along the line they have to get rid of the dated feeling of the corporate identity
dated feeling of the corporate identity.”
As to whether the company will recover, Andrew said: “They are a very strong company and I think that they’ve got incredibly good and talented people working for them and they just need to put their minds together.”