Johannesburg - Mr Price Holdings is launching a new store concept aimed at catering for children, with four stores to be opened by the end of November this year.
Besides carrying apparel, furniture, linen and accessories - which the company already does through existing chains Mr Price, Sheet Street and Mr Price Home - the new Mr Price Kids stores will offer early learning and fantasy dress-up ranges aimed at children up to seven years of age at value-for-money prices.
Its bedding furniture range will cater for children up to 10, according to CEO Alastair McArthur.
The concept was tested in the company's 6 000m² superstores.
McArthur said the company would be converting some of the smaller Mr Price Home stores that are located close to large-format, new generation Home stores into Mr Price Kids stores. Sales at 12 of the smaller stores are being cannibalised due to their proximity to the large standalone stores, which have become "destination" outlets for SA shoppers.
Mr Price's interim results to end-September 2007 show that retail sales at Mr Price Home grew by 17.4% to R746m. Trading densities dropped slightly form R16 553/m²: to R15 193/m², but this is due to a 30% increase in net trading space.
Sales grow strongly
McArthur noted that the rate of growth in the home segment - which comprises Mr Price Home and Sheet Street - had slowed and is evidence that the buoyant economic environment enjoyed by retailers has been curtailed following seven interest rate increases, the effects of the National Credit Act on consumers and higher food and fuel prices. "These divisions will experience the slowdown earlier as these products are more of an investment buy," said McArthur.
Nonetheless, Mr Price's overall retail sales were up by 22% to R3.bn for the period, with operating profit rising 25% to R261m. The retailer's operating margin rose from 7.8% to 8.0%, "the first time that the margin has jumped at the half-year mark, and this despite the start-up loss in Mr Price Sport", said McArthur. "In tough times like these, people are buying more from us at apparel and sport. Our move to fashionability has been successful for us.
When things slow does, people seem to continue to want to buy fashion, but at cheaper prices.
Mr Price Sport was launched in July 2006 and currently comprises 12 stores which generated R82m in sales (R12 703 in retail sales per square metre) in the period. A further 11 stores will be trading by the end of November and a total of 27 stores will be trading by the end of the financial year in March. McArthur expects sales to grow to R300m by year-end.
Sales in Mr Price chain raced ahead, growing by 22.7% to R1.7bn, while comparable store sales were up 21.1%. Retail selling-price inflation came in at 12.4% as Mr Price introduced more fashionable goods at slightly higher prices. McArthur said new stores in township areas helped Mr Price grow its market share.
Its stores in two new mega-malls in Soweto are beating al
expectations: at Jabulani Mall, the store "continues to trade well above feasibilities and generate a forecast return on capital in excess of 300%", while trading at the store in the Maponya Mall exceeded the plan by 200%.
More concepts launched
Besides the kids store concept, the company recently opened four Mr Price 'Express' concept stores, which are typically less than 500m², with fixtures costing up to 40% less than in other stores. "We have identified 70 new locations and also plan to convert 60 existing Mr Price Stores in similar small town locations to this new format, said McArthur.
Also, the Miladys chain tested a stand-alone René Taylor store concept, which caters for the fuller-figured woman, in the Kolonnade Centre in Pretoria. Sales are ahead of plan and a second store has been opened in Somerset Mall, Cape Town.
Despite now offering credit in all its chains, Mr Price remains a predominantely cash business with 86% of sales being cash sales. The group has 617 000 accounts across its chains, and its book has grown by 43.5% to R518,9m. Net bad debts for the period rose to 5.1% from 3.1%, and the provision for bad debts rose to 9% as a percentage of debtors (from 6.9%).
The group noted a significant drop-off in application in June, when the credit act was introduced: 42 731 applications were received in May, while only 21 353 were made in June. The figure had, however, climbed to 28 931 by October.
Rejection rates peaked at 81% in June, but have stabilised around 67%.
- Fin24