Mr Price on the rise

Mr Price has reported strong results for the first half of its 2025 financial year as the retailer continued to implement its ‘EDLP model’.

Mr Price released its results for the 26 weeks ended 28 September 2024, which revealed solid results.

The retailer’s total revenue increased by 5.2% to R17.6 billion, as its retail sales growth of 5.1% outperformed the comparable market’s sales growth of 2.2%.

This allowed Mr Price to gain 60 basis points of market share and expand its gross margin by 110 basis points to 39.7%.

Mr Price’s basic and headline earnings per share of 481.5 cents and 481.8 cents were up 7.3% and 7.1%, respectively. Diluted headline earnings per share grew 6.5% to 468 cents.

The retailer’s profit from operating activities increased by 4.0% to R2.0 billion. However, its total expenses increased by 9.2% as the group continued its space growth investment. 

This resulted in Mr Price’s operating margin decreasing by 10 basis points to 11.4% of retail sales and other income, mainly attributable to the challenging Q1 sales environment. 

However, it noted that the company’s operating margin in H1 is typically seasonally lower than in H2.

“While there were macroeconomic positives of no load-shedding, increased political stability, and the appreciation of the rand, the earnings performance during the period is reflective of the continued constraint on consumer affordability levels,” the retailer said.

“Negative real wage growth and low disposable income growth remained weighed down by the effects of previously prolonged periods of high inflation, elevated interest rates and high consumer debt servicing levels.”

However, the retailer said its market share performance highlights the resilience of its EDLP model in a persistently challenging retail environment. 

Mr Price’s EDLP model refers to the ‘Everyday Low Pricing’ strategy the retailer employs. 

This pricing approach is designed to offer customers consistently low prices without relying heavily on sales promotions or discounts. Instead of fluctuating prices, the EDLP model provides stable, affordable pricing on products year-round.

The company credits this strategy with helping it gain market share in 5 out of 6 months, only losing share in the highly promotional month of July as competitor winter merchandise was discounted.

Mr Price added that it has now gained market share for four consecutive quarters. 

“The financial year started with a very challenging first quarter, impacted by a contraction in the economy caused by uncertainty prior to the national elections and the late onset of winter,” CEO Mark Blair said. 

“We are very satisfied with our overall market share performance, which was supported by higher gross margins in all three trading segments.” 

“The increasing sales momentum in the second quarter and the strong start in the second half with sales up 12.4% in the first 7 weeks is encouraging and, hopefully, early signs that South Africa is entering an upward economic cycle.”

Mr Price declared an interim dividend of 303.6 cents per share, up 7.1% from the previous year.