MR PRICE Apparel recorded a 42.3 percent growth in sales during and has been gaining market share for 19 consecutive months. Photo: Reuters
MR PRICE Apparel recorded a 42.3 percent growth in sales during and has been gaining market share for 19 consecutive months. Photo: Reuters

Focus on being fashionable and affordable boosts Mr Price

By Dineo Faku Time of article published Nov 26, 2021

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VALUE retailer Mr Price’s shares surged 7 percent on the JSE, as it reported a recovery from the Covid-19 induced slump and market share gains despite the supply crunch experienced during the half year to October.

The shares surged after the release of the results to a high of R202.21.

The group recorded a 37.8 percent growth in retail sales during the 26 weeks ended October, up from 17.4 percent in the same period last year on the back of market share gains led by the apparel and footwear divisions.

Mr Price Apparel recorded a 42.3 percent growth in sales during and has been gaining market share for 19 consecutive months.

Chief executive Mark Blair said in spite of the ongoing external challenges, the group’s market share gains highlighted the defensive nature of its business model through its compelling customer value proposition.

“The differentiation that it offers its customers through its merchandise fashionability is highlighted by its largest division, Mr Price Apparel, gaining market share for 19 consecutive months,” Blair said.

Blair said despite of supply disruptions as a result of Covid-19, the group had entered the high summer season between October to December with fresh and available stock. This was made possible by the high volume of units sourced in South Africa.

Blair said the group would keep a close eye on inflation. “The group has advanced hedging policies, covering exchange and freight rate contracts, giving it comfort that it has secured highly competitive rates, enabling it to make the best possible commercial decisions regarding inflation and margins,” he said.

Mr Price said online sales growth of 49.9 percent was against a high growth rate of 48.7 percent a year earlier due to Covid-19 related increased demand.

Online sales continued to increase in retail sales contribution, up to 2.9 percent and 2.7 percent excluding acquisitions, said Mr Price.

Commenting on the results Euromonitor analyst Steven O'Ehley said the recent performance of Mr Price had been driven by the resilience of the value segment with the South African footwear and apparel market.

He said Covid-19 had caused a downturn in the South African economy and rising unemployment, as consumers have faced economic hardship and uncertainty, they had sought out value offerings within the market.

“The offerings available at Mr Price, focus on being fashionable and affordable. This has meant that Mr Price has remained resilient during tough economic conditions. Another factor, driving Mr Price’s results as an outcome of Covid-19 is the growth of the homeware sector,” he said.

O’Ehley said as people continued to stay home, they had invested in making their homes an enjoyable and pleasant place to be, benefiting Mr Price Home and Sheet Street.

“The value offered by Mr Price in both the homeware and fashion markets have seen it gain market share against its competitors,” he said.

O’Ehley said the group’s resilience and recovery had been aided by the the strong performance of their e-commerce offering.

Mr Price has been on an aggressive growth path as part of its expansion strategy.

Since the end of their financial result period, Mr Price has expanded its store footprint by 211 stores, 30 of which were new stores as at April. The remaining 181 stores came as a result of the acquisitions of budget retailer Power Fashion and Yuppie Chef which focuses on the higher end of the market .

“Yuppie Chef expanded the retailer’s presence in the homeware market, catering to a higher income bracket than Mr Price home,” O’Ehley said.

Mr Price said the looting in Gauteng and KwaZulu-Natal resulted in the group having to close 111 stores due to stolen stock and store damage.

BUSINESS REPORT

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