Cash is still king in South Africa

Nearly 90% of Mr Price’s sales for its 2024 financial year were conducted in cash, while growth in its credit sales remained flat compared to the previous year. 

The clothing retailer released its full-year financial results today, revealing that its operating profit crossed the R5 billion mark for the first time ever. 

Mr Price’s profit for the year ended 31 March increased 6.1% to R3.4 billion on the back of strong revenue growth of 15.5%.

Of its R36.6 billion in retail sales, 88.9% were made in cash. Interestingly, its cash transactions grew by 18.3% over the financial year. 

On the other hand, its credit sales, which have been seen as an area of significant future growth for retailers in South Africa, only grew by 1.7%. 

Mr Price said its 2024 financial year was marked by disruptions from load-shedding to global supply chains. It estimated that load-shedding cost the company around 65,000 trading hours, or about R226 million in revenue. 

This should not be a problem going forward as the company has ensured 100% of its stores have backup power. 

Headline earnings per share of 1,286.2 cents were up 6.7%. A final dividend of 526.8 cents per share was declared, up 17.8%.

Global and domestic supply chain disruptions challenged optimal inventory management. 

These challenges were faced against the backdrop of a weak consumer environment, as elevated inflation levels continued to impact low-to-middle-income households, which is the group’s core customer base.

Total store sales increased by 16.6%, including the acquired Studio 88 Group, which contributed 97.9% to retail sales, while online sales decreased by 2.2%.

Through acquisitions and investment into new space, the group has more than doubled its store footprint over the last five years. 

Mr Price plans to open around 200 new stores in the current financial year. 

The company said the later arrival of winter this year resulted in subdued trade in the first two months of the 2025 financial year. 

Despite this, the group gained market share in April, and sales growth recovered strongly in early June, which was driven by the onset of winter.

Group retail sales in the first quarter of the 2025 financial year to June 11 increased 4.4%.

Reserve Bank’s cashless plan

South Africa is on the road to becoming cashless, with the Reserve Bank publishing its digital payments roadmap to overcome the barriers to reducing cash use in the country. 

The roadmap, published last month, laid out a 17-item action plan that the Reserve Bank has to increase the effective use of digital payments in South Africa. 

Partner at Webber Wentzel, Lerato Lamola, explained that this roadmap follows the National Payment System Framework and Strategy Vision 2025: Action Plan published in 2018.

The benefits of digital payments are safety, convenience, cost-effectiveness, women’s empowerment, business opportunities, and transparency, the bank said. 

Lamola said the obstacles and challenges that need to be addressed to achieve South Africa’s goal of being a country that relies mostly on digital payments are –

  • low bank account usage
  • high cash usage
  • transactional costs
  • infrastructure
  • regulatory framework

An overarching challenge that needs to be overcome is consumer trust in digital payments. A lack of trust influences how consumers adopt and interact with digital platforms.