Mr Price earnings plummet, online sales drop

Mr Price’s performance deteriorated in the first half of the 2024 financial year, as the retailer’s earnings dropped by around 10%.

Mr Price released its results for the 26 weeks ended 30 September 2023 today, which revealed poor results for the company.

Despite a 27.8% increase in retail sales, the company’s earnings dropped by around 10%.

Basic earnings per share were down 10.3% to 448.8 cents, while headline earnings per share dropped by 9.3% to 449.9 cents.

This is despite revenue growing by 26.4% to R16.8 billion and retail sales of R16.1 billion.

The retailer’s finance income declined by 55.6% to R57 million due to the acquisition of Studio 88 (S88), which was funded entirely from cash resources. 

Retail sales, excluding S88, grew by 3.8%, with most of the growth coming from Q2.

Notably, the retailer’s online sales dropped by over 5.7%, excluding S88, against double-digit growth of 11.2% in the prior period. 

This is a concerning figure, as many of Mr Price’s competitors and other retailers are seeing consistent growth in online sales.

Mr Price’s total unit sales increased by 8% but decreased by 1.1% when excluding S88. 

The retailer’s store footprint grew to 2,809 stores, increasing by 121 new stores, which includes 63 new stores from the existing business and 58 from S88).

Cash sales constituted 87.8% of the company’s retail sales and increased by 32%. The company saw credit sales growth of 3.3%, reflecting the retailer’s cautious approach to credit. 

Mr Price reported a 14.2% increase in credit applications received, but its approval rate decreased to 18.6% from 27.1% in the prior year.

The retailer’s gross profit margin declined by 170 basis points to 38.6%. 

This was impacted by higher markdowns, the inclusion of S88, which operates at a lower margin than the group, and further currency depreciation. 

If excluding S88, the retailer’s gross profit margin was down 100 basis points due to the impact of Q1, which saw a 350 basis point decline but recovered strongly in Q2, which saw the margin up by 190 basis points.

From a segmental perspective, Power Fashion, Yuppiechef and the retailer’s Telecoms business grew their gross profit margin during H1, while those same businesses, as well as Mr Price Apparel and Sheet Street, achieved gains in Q2.

Mr Price’s net profit for the half-year dropped by 9.8% to R1.16 billion. 

The retailer declared an interim dividend of 283.5 cents per share – a 9.3% decrease against the prior year.