Mr Price prepares for lockdown sales knock


Mr Price prepares for lockdown sales knock

Published Date: 2020-03-27 | Source: Stephen Gunnion | Author: Stephen Gunnion

Mr Price prepares for lockdown sales knock

The retailer says it will not make any local sales at all over the next three weeks, starting its new financial year on the back foot.

Mr Price has warned that it could lose over R1 billion in sales in the weeks ahead as it suspends operations due to the 21-day lockdown aimed at slowing the spread of the coronavirus. In an update, the budget clothing and homeware retailer also warned that its final dividend could be at risk.

The group said initial concerns about supply issues as factories closed in China due to the outbreak of Covid-19 had developed into demand issues. Although it moved quickly to ensure its supply chain was able to adjust to replace the most at-risk merchandise, it now has to manage its order book to overcome impending stock building up.

In the first two weeks of March, sales grew 8.6% year-on-year, but after President Cyril Ramaphosa's first announcement on Covid-19 on March 15, they started to deteriorate, declining 22.1% over the period between 16 March and 24 March from a year earlier. Demand for clothes and homeware was significantly impacted as consumers prioritised hygiene and food items. From today until 16 April, all its stores, e-commerce, head office, distribution centres and call centres will be closed. As a result, during the lockdown period it anticipates making no sales at all in SA, which contributes about 92% of group sales. Last year, it generated sales of R1.2 billion in the first three weeks of its financial year, which starts on 1 April.

Mr Price said annual salary increases for its head office associates had been delayed until further notice, while executive management and its board of directors had committed to a cut in salaries and fees. It will pay staff their full salary and benefits for March and April despite the lockdown.

With the lockdown extending from the end of its 2020 financial year into the start of its 2021 financial year, it said its reporting period deadlines could be affected. The impact of the pandemic may also affect the declaration of its 2020 final dividend.

Mr Price's shares closed 9.5% up at R128 yesterday. The update was released after the close of trade.

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