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Mr Price lifts dividend in tough trading conditions

May 31 2019 17:46
Sibongile Khumalo

Mr Price Group lifted revenue 5.8% to R22.6bn, with retail sales increasing 4.4%, according to the company’s annual financial results released on Friday. 

Diluted headline earnings per share, for the financial year ended 30 March, increased 6.2% to 736.2 cents, while basic earnings per share jumped 7.0% to 1 156.6 cents.

The fashion retailer, which includes stores such as MRP Home, MRP Sport, Sheet Street and Miladys, said all divisions grew merchandise margins except for MRP Apparel, whose fourth quarter markdowns offset prior gains. Cash sales grew by 6.6% and constitute 84.2% of total sales, while credit sales, including cellular increased by 2.3%.

However, the company said the local market was likely to "remain under pressure in the short term" due to low levels of disposable income continue and flat real wage growth.

"We are pleased to be able to deliver solid earnings growth and increase our dividend to shareholders in what has been a very tough year for retail," said CEO Mark Blair.

"Despite this, both our apparel and homeware segments outperformed the market and gained market share on an annual basis. For the first time our retail sales exceeded R20bn and profit before tax R4bn."

Despite discretionary spend, sales in MRP Home were up 7.2% from 4.5%, with online up 34.8%. Sheet Street grew sales by 4.0%, from 1.6% during the previous period. Given the weak credit environment and a rising number of new accounts in early default, the company said it had had to apply a prudent approach to credit.

This resulted in less accounts approval, despite growing new account applications, said the Durban-based company, which plans to open 70 new stores by the end of the 2020 financial period.

Local store sales were up 3.8%, while non-South African store sales grew 12.1%, boosted by the acquisition of the Kenyan franchise stores in May 2018.  

However, Mr Price Group has decided to shut down its test stores in Australia, it said on Friday, due to low returns. The test stores stopped trading in April.  

mr price  |  financial results
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