Mr Price sees sales normalisation in first quarter of FY2023

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JSE-listed apparel and homeware retailer Mr Price saw a slowdown in retail sales in the first quarter of its 2023 full-year period, coming off the high base registered during its post Covid-19 recovery peak.

Further influencing the group’s performance normalisation was the loss of trading hours due to load shedding as well as the non-payment of social relief of distress (SRD) grants in April and May, it says in a trading update for the 13 weeks to 2 July 2022 published on Monday.

Despite the impact of these headwinds, the group reported 6.4% growth in total retail sales to R6.6 billion.

The apparel segment – which includes Mr Price and Mr Price Sports clothing stores, Miladys and newly acquired Power Fashions – saw a 8% rise in sales during the period. As expected, this contributed a large portion to the group’s retail sales performance, accounting for 74.3% of sales during the period.

The home segment – which now includes upmarket retailer Yuppiechef and Mr Price Home – saw a 1.6% strengthening in sales, contributing 22.2% to total retail sales during the period.

The group’s telecoms segment, which supplies cellular handsets and accessories, saw a 4.4% uptick in sales and contributed 3.5% to overall group performance.

The group also reported a steady rise in online sales for the period, rising by 21.4%. Although still strong, this is a slide down from the 61% rise reported in the 2022 full-year period.

Read: Mr Price grants CEO R33m bonus as he’s ‘not paid enough’

Outlook

Although the current volatile inflationary environment continues to place consumers in a tight spending position, the group says it is confident it will remain protected and well positioned for future growth.

“[Mr Price] is confident that its strategically positioned divisions can collectively create the defensive hedge required to provide value to customers and gain market share,” it says.

“The group anticipates its H1 FY2023 gross margin to exceed H1 FY2022. Its fashion differentiation at every day low prices is expected to provide a key competitive advantage in this retail environment.”

The resumption of payment of the R350 SRD grant as well as the decision by government to expand this support to more South Africans is expected to further drive growth for the group as it completes the first half.

“Some positive tailwinds could materialise in the second quarter of FY2023. These include the continuation of the COVID-19 social relief of distress grant payment (including relaxed minimum income criteria thresholds), as well as back pay in July and August 2022 (for the months of April and May 2022 non-payment).”

Further, sales for the second quarter of the current period are bound to see an improvement as they will be coming off the low base reported in the previous comparable period as a result of the negative impact of the July unrest, which saw sales take a dramatic knock fuelled by the forced closure of 111 stores.

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