Market ‘disappointed’ in Mr Price’s interims, but revenue is up by 6.5%

MR PRICE’S shares dropped by almost 8% yesterday after the retailer reported that its revenue growth was knocked by load shedding, social grants and the replacement of its Merchandise Enterprise Resource Planning system.

In its results for the 26 weeks ended October 1, 2022, released yesterday, revenue was up 6.5% to R13.3 billion.

The retailer said electricity load shedding caused 56% of trading days to be interrupted during the reporting period and estimates that more than 80 000 trading hours were lost.

Retail sales grew 6% to R12.6bn. Group store sales were up 5.8% and online sales increased by 11.2%.

Mr Price also said the inconsistent and non-payment of social grants during the period impacted its trading.

“The replacement of the group’s Merchandise Enterprise Resource Planning system on April 2, 2022, disrupted supply chain and merchant activities, and materially impacted retail sales in April and May, it said.

Sales for these two months combined, which contribute approximately 40% of the first half of retail sales, grew by 3.1%, while June to August sales performance improved, rising by 12.9%.

“September was a poor trading month for the market as a whole as severe load-shedding was implemented, 44.1% of trading hours lost in the first half were in September alone, and sales declined 6.7%,” the group said.

Mr Price chief executive Mark Blair said: “The top-line performance did not meet our internal targets, but our market-leading retail performance postCovid-19 with sales growth of 37.8% in the base, in which we gained further market share, was always going to present a challenge.

“I take comfort that the system’s impact, in particular, is once-off, and we have achieved a significant milestone in our Retail Modernisation Programme aimed at de-risking our IT environment and establishing an infrastructure to support our ambitions”.

Blair said the good news was by yearend, Mr Price would have some power back-up in 70% of its stores.

“This would be a big jump from where we were in September,” he said.

The group increased its basic earnings per share by 13.7% to 500.1 cents, headline earnings per share (Heps) grew by 10.6% to 496c, while diluted headline earnings per share increased by 10.8% to 486.1c. A dividend of 312.5c per share was declared, a 10.6% increase against the prior year.

The apparel segment’s operating profit increased by 22.8%, while the homeware segment grew by 46.6%.

“The homeware segment has seen aggressive competitor activity over the last 12 months which has negatively impacted its market share, which remains dominant,” Mr Price said.

Looking forward, Mr Price said adverse global economic factors would continue to cast uncertainty upon the balance of this financial year.