Mr Price Group's [JSE: MRP]half-year financial results was impacted by the underperformance of its apparel division, with headline earnings per share down nearly 8%.
The retailer on Thursday released its interim results for the 26 weeks ended September 28, 2019.
Headline earnings per share was down 7.9% to 455c for the period. However, the share price started the day at R172, before climbing more than 7% to R177.30 by 09:20. By 09:40 the share price was up 8.21% at R178.50.
The group referenced a previous trading update in August, in which it warned that the under performance of its apparel division would impact its results. However five of the group's divisions managed to grow sales, gross margins and operating profits.
"The group's balance sheet is strong, with cash and cash equivalents increasing to R4.2bn, which has enabled the interim dividend to be maintained at 311.4c per share," the statement read.
Overall revenue grew 2.6% to R10.8bn, with retail sales growing 1.7% to R9.9bn. Excluding Mr Price Apparel, revenue and retail sales grew 7.3% and 6.1% respectively. Online sales growth of 28.3% outshone store sales growth of 1.3%.
During the period the group opened 27 new stores and expanded eight, and also closed 12 stores and reduced the size of 16 stores. The total number of corporate-owned store locations grew 4% to 1 338, according to the report.
Income from the group's other divisions grew 10.2% to R770m, this is attributed to 10.3% growth in the group's financial services and cellular business units. The group's interest on cash balances increased 31.8% to R135m.
Overall profit from operating activities was down 1.6% to R1.7bn.
For the apparel division operating profit declined 13.6% - with sales declining 1.3% to R5.8bn.
"Retail sales outside South Africa, which constitute 7.9% of group sales, declined by 2.2%, partly explained by the performance of Mr Price Apparel," the statement read. Apparel accounts for 69.7% of non-South African sales.
In contrast the home segment grew operating profit by 17.8%.
"The group has elected to focus on areas of significant potential and accordingly exited Australia. Likewise, the Mr Price Home Polish test store will be closed in December," the report read.
Mr Price will also be focusing on improving the performance of its apparel division. The group is focused on winning market share, particularly in Mr Price Apparel.
Mr Price does not anticipate a short-term recovery in the consumer environment and said that meaningful GDP growth would only return once structural economic reforms gain traction.
Mr Price also gave an update on a probe into allegations of non-compliance with the Mr Price code of conduct, which involved two senior staff members in dealings with a single supplier. The misconduct may have resulted in financial exposure of between R10m and R20m, Fin24 previously reported.
"The group has concluded its internal investigation into the suspected non-compliance with its code of conduct," the report read.