Mr Price flagged a growth in retail sales on the back of a strong performance by the recently acquired Studio 88 (S88).
Mr Price acquired Studio 88, a retailer of branded leisure, lifestyle, and sporting apparel and footwear in October in a R3.6 billion deal.
In its trading update for the 13 weeks ended July 1, 2023, the group said on Friday that it recorded growth in retail sales and other income of 21.4% to R8.4bn.
The retailer said soft retail demand experienced by the sector during the second half of the 2023 financial year had continued into the first quarter of the 2024 financial year, aggravated by the highest levels of load shedding in the calendar year recorded in April and May 2023.
“Consumers continued to be negatively impacted by the rising cost of debt after the most recent interest rate increases in March and May 2023,” it said.
According to the group, “As experienced by the retail market in general the group's new financial year got off to a slow start. April commenced with power back-up in 60% of stores in the group's core business, and recorded sales growth of 12.8%, excluding Studio 88: -5.0%.
“Trading performance improved as backup power solutions were extended to all stores by June 30, 2023, with retail sales for May and June combined increasing by 33.0%," it said.
Its South African retail sales grew 20.9% to R7.5bn while non-South African corporate-owned store sales increased 35.9% (excluding S88: 4.4%) to R614 million.
“Total store sales increased 22.8% (excluding S88: 1.2%). Online sales, which contributed 2.4% to retail sales, decreased 5.3%, excluding S88: -7.5%, off a high base of 21.4% in the prior period.
“Retail sales and comparable store sales trends in the group's largest division, Mr Price Apparel, improved each month as the quarter progressed. Power Fashion and S88 continued to grow retail sales by double digits, and both businesses reported positive comparable store sales,” it said.
In the Home segment, the retailer said retail sales momentum had improved from the double-digit decline in the fourth quarter of the 2023 financial year to a decrease of 1.7%, as performances in Mr Price Home and Sheet Street improved.
“Yuppiechef continued to report double-digit sales growth supported by its omni-channel expansion.
“The Telecoms segment remains robust, with sales in cellular handsets and accessories up 11.0%. Cellular merchandise is now trading in 484 stores, including 18 standalone stores, which continue to report strong comparable store sales growth,” it said.
Its store footprint increased by 58 new stores with a total footprint expanded to 2 756 stores.
Looking ahead, Mr Price said the growth outlook globally and in South Africa for the remainder of 2023 was likely to remain muted.
“Disposable income is only anticipated to meaningfully improve during 2024, as inflation moderates and interest rate relief is experienced by consumers.
“Persistent and elevated load shedding continues to be a drain on growth and a hindrance to economic progress in South Africa,” the group said.
Mr Price said despite implementing backup power solutions, concerns remained regarding the resultant impacts these conditions were having on small businesses, employment, and changing shopping behaviour.
“As recently communicated, the group's first half performance is expected to remain challenging,” Mr Price said.
Ashburton Investments Senior Portfolio Manager Wayne McCurrie @WayneMcCurrie said on Twitter, Mr Price update. I thought quite weak. If you exclude Studio 88 acquisition, volume was down and sales value stagnant. Suppose market was anticipating this as valuation was not high.“
Mr Price’s share price closed 0.33% higher at R144.99 on Friday on the JSE.
BUSINESS REPORT