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Upbeat Mr Price sees rise in earnings

Johannesburg - Retailer Mr Price Group [JSE:MPC] on Monday reported diluted headline earnings of 143.1 cents for the six months ended September 2010 from 97.3 cents previously.

Its diluted basic earnings per share rose to 140.8 cents from 96.3 cents earlier.

Revenue increased to R4.915bn from R4.439bn, while profit from operating activities increased to R538.78m  from R342.297m in 2009.

The group declared a dividend per share of 76.7 cents per share from 46.2 cents previously.
 
The group increased retail sales by 11% to R4.8bn, compared to the total retail sector which grew by 7% for the five months ended August 2010, as reported by Statistics South Africa.

The group said sales in like-for-like locations were up by 7.5% and weighted average trading space increased by 2.4%. The group sold more than 80 million units during the period, a growth of 9.7% and merchandise inflation of 1.4% was recorded.

 
Other income rose by 12.6% due to interest received on a higher debtors book and an increased take up rate of financial services products.

Costs and expenses were tightly controlled, increasing by 7.1%, well below the increase in sales, according to Mr Price.

The gross profit percentage increased from 39.1% to 41.2%, primarily as a result of reduced markdowns, it said.

The Apparel chains increased sales and other income by 11.5% to R3.5bn with operating profit of R517.5m up by 34.4%, resulting in the operating margin increasing from 12.6% to 15.2% of retail sales.

Mr Price Apparel recorded sales growth of 12% "and once again exceeded budgeted profitability levels," the group said.

Mr Price Sport increased sales by 25.9% and a 38.7% increase in gross profit contributed to a significant improvement in financial performance, it said.
 
"Miladys sales increased by 2.5%, however an improved gross margin and limitation of expense growth to 4.3%, enabled the division to record a substantial increase in operating profit," Mr Price said.

Its Home chains achieved a 10% increase in sales and other income to R1.4bn and the operating margin increased to 6.1%. Mr Price Home increased sales by 11.5% and Sheet Street by 6.7%.

"Steps taken last year to enhance the performance of these chains, improved gross margin percentages and cost curtailment all impacted favourably on the financial results," the group said.

Mr Price said consumers would benefit from interest rates which are at a 30 year low, a strong rand, low inflation and in certain sectors, salary and wage increases in excess of consumer inflation.

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