Mr Price shares take a beating

CLOTHING apparel and homeware retailer Mr Price shares tumbled 13.70 percent to close at R151.46 on the JSE yesterday, wiping off billions after the group reported a weak trading update for the four months to end August 3 on constrained consumer spending in the country.

Mr Price said retail sales at its home market of South Africa rose marginally by 0.6 percent to R6.4 billion during the period, and store sales 0.2 percent.

It said only online sales recorded strong growth of 31.1 percent to R109.1 million.

“Consumers continue to be constrained, which is affecting propensity to spend. Gross domestic product growth, unemployment, inflation and disposable income remain at levels that are not supportive of growth in the retail environment,” Mr Price said.

The news sent shock waves in the market, with industry peers following taking a cue from Mr Price. Truworths fell 3.41 percent to R51.60, while Woolworths eased 3.27 percent lower to R51.75. The Foschini Group fell 2.63 percent to R144.74, while Pepkor declined 1.41 percent to R16.09.

Statistics South Africa recently said retail sales in South Africa increased 2.4 percent year-on-year for the second quarter to end June while the country’s unemployment rate increased by 1.4 percentage points to 29 percent in the second half of the year.

Mr Price said sales in its apparel division decreased 2.1 percent, while the homeware unit rose 3.2 percent.

The sports section inched up 9.3 percent, while its online sales rose by 31.3 percent.

However, sales in non-South African corporate owned stores grew 0.3 percent to R522.3 million.

The group said its cash sales increased 1.4 percent.