Mr Price slumps amid load shedding and social grant disruptions

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Mr Price store front .(Supplied - Mr Price Group)
Mr Price store front .(Supplied - Mr Price Group)
Mr Price Group

Shares of JSE-listed retail group Mr Price slumped as much as 7.5% on Thursday, after it missed its half-year revenue growth targets, attributing this to load shedding, social grant payment disruptions and a change to its merchandise planning system.

Shares of the group were down 6.5% to R173.55 at 10.30am, recovering some of its intraday losses, but bringing its loss for the year so far to above 13%. Click here for more details on Mr Price's shares and other info.

CEO Mark Blair said in a statement that accompanied results that the "top-line performance did not meet our internal targets" but that its "market leading retail performance post Covid-19 with sales growth of 37.8% in the base" was "always going to present a challenge".

The company said 56% of its trading days had been interrupted by load shedding during the 26 weeks ended 1 October 2022, estimating it lost 80 000 trading hours, while "inconsistent and non-payment of social grants" had also brought pressure to bear on the topline growth.

At the same time, the replacement of Mr Price’s "merchandise enterprise resource planning system" on 2 April had also "disrupted supply chain and merchant activities".

But while the group said revenue grew 6.5% to R13.3 billion for the 26 weeks ended 1 October 2022, it still managed to deliver double digit earnings growth.  It said diluted headline earnings per share increased by 10.8% to 486.1 cents. It also increased its interim dividend to shareholders 10.6% to 312.5 cents.

It also said that it managed to increase its gross margin by 60 basis points and kept expense growth "well-controlled at an increase of 5.9%".

"This enabled the operating margin to improve to 80 basis points. This result was achieved in a highly contested retail environment where consumer spending was constrained."

As far as retail sales were concerned, Mr Price said they grew 6% to R12.6 billion, while sales at comparable stores declined by 0.3%. But group store sales were up 5.8%, while online sales increased 11.2%.  The company also said that it opened 78 new stores and expanded 11, adding that the “weighted average new space” grew 6.3%.

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