Mr Price faces new threat in South Africa

Mr Price has sounded the alarm about South Africa’s online betting boom, saying it, along with high debt servicing costs, is putting pressure on households’ disposable income.

The retailer explained this in its sales update for the 13 weeks ended 27 December 2025, released on Wednesday, 28 January.

This 13-week period marked the third quarter of Mr Price’s 2026 financial year, during which the retailer’s sales increased by 3.6% to R15.1 billion on a group level.

The retailer noted that this 3.6% sales growth is far above the market average of 1.6%, as recorded by the Retailers’ Liaison Committee.

Mr Price’s sales growth in this quarter consisted of 3.2% growth in its apparel segment, which contributed 83.1% to the total. 

However, the group noted that comparable store sales in this segment increased by a far more muted 0.4%.

Its homeware and telecoms segment saw far faster growth of 4.5% and 11%, respectively, though these divisions constituted a smaller share of the total, at 14% and 2.9%, respectively.

Notably, comparable store sales in the homeware division were also far weaker at 1.7%.

Mr Price explained that its sales growth in the third quarter came off a high comparative base, as two-pot withdrawals in the third quarter of its 2025 financial year boosted sales growth significantly.

Regardless, the retailer recorded further market share gains in its core market of South Africa in the third quarter of its 2026 financial year.

However, the group explained that its gross profit (GP) margin decreased by 20 basis points during the quarter.

“The group anticipates that GP margin for the financial year ended March 2026 will at least be maintained at FY2025 levels,” it said. 

“Management is comfortable with both the current cash position of the group and the shape of stock heading into Q4 of FY2026.”

“Adequate plans have been made to achieve targeted closing inventory levels at the end of the financial year.”

The retailer said South Africa’s discretionary retail consumer environment was muted throughout most of 2025.

According to Mr Price, this was because disposable income growth was absorbed by high household debt servicing costs and increased discretionary spending on online betting and “other categories”.

Pick n Pay CEO Sean Summers previously voiced similar concerns, saying the betting industry is highly extractive and has the potential to seriously impact the country’s economy.

However, Mr Price said it is optimistic about South Africa’s economic growth prospects for 2026, saying indicators support a more improved outlook, although it warned of ongoing uncertainty.

“Growth is expected to be supported by low and stable inflation, expected further interest rate cuts, positive effects from the strong commodity cycle and continued currency strength against the dollar,” it said.

“However, the international political and economic environments are uncertain and could hold risk for South Africa’s improving prospects.” 

“The retail sector should benefit from the healthier macroeconomic environment supporting increased flow-through of disposable income to discretionary categories.”

For the time being, Mr Price said it is off to a strong start in the new year, with the first four weeks of January seeing 4.2% sales growth.