Mr Price positioned for online growth


Mr Price positioned for online growth

Published Date: 2020-06-26 | Source: Stephen Gunnion | Author: Stephen Gunnion

Mr Price positioned for online growth

The budget retailer says it remains to be seen whether the growing move to online shopping is a permanent step change in consumer behaviour.

Mr Price says online sales have boomed since lockdown restrictions were eased, allowing South Africans to resume shopping. Pent up demand following total closure in April resulted in retail sales rising 12% between 1 May and 20 June, driven by a 90% rise in online sales - with purchases of clothing and sportswear more than doubling.

The budget retailer says its historic and ongoing investment into its omni-channel offering has positioned it to take advantage of the trend as Covid-19 keeps many shoppers at home. However, it said it remained to be seen whether this was a permanent step change in consumer behaviour.

The national state of disaster and the lockdown came just ahead of Mr Price's March year end, disrupting the last two weeks of trading. Apart from decimating April's sales, it also resulted in additional impairment provisions on its stock, debtors' book and insurance claims.

For the year, total revenue from continuing operations grew 2.1% to R23 billion with retail sales increasing by 1.5% to R21.2 billion. Second-half sales were stronger as turnaround initiatives at Mr Price Apparel gained traction. It said the improvement came despite a highly promotional trading environment that was further disrupted by regular load shedding. Continuing operations exclude Australia and Poland, which it exited last year. It plans to close shop in Nigeria this year.

Basic earnings per share (EPS) fell 9.5% to 1,042.4c, while headline EPS declined by 10% to 1,047. Excluding the additional Covid-19 provision and the effects of its transition to the new IFRS 16 accounting methodology, adjusted normalised diluted HEPS were 4.6% lower at 1,089.3. It hasn't declared a final dividend so it can preserve cash due to the uncertainty caused by the pandemic.

The retailer said its balance sheet remained healthy, with its net asset value per share increasing by 8.7% to R36.36 from last year. Cash and cash equivalents rose to R4.7 billion and it reported a free cash flow conversion ratio of 133.3%. Due to anticipated consumer distress, it increased its impairment provision to 10.4% from 7.5% in September.

Mr Price said it still planned a potential capital raise of up to 10% of its share capital at an appropriate time and as market conditions permitted as expected market conditions would allow strong companies to capitalise on growth opportunities.

Its shares declined 0.3% to R145.34 yesterday.

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