Mr Price reports record market share as sales grow


Mr Price reports record market share as sales grow

Published Date: 2021-01-25 | Source: Stephen Gunnion | Author: Stephen Gunnion

Mr Price reports record market share as sales grow

The value retailer warns that the end of government support initiatives is likely to affect discretionary spending.

Mr Price Group has stolen a march on some of its competitors, growing sales in the three months to end-December as it increased its share of the market. It says spending was supported by economic assistance provided by the government and private sector, which created temporary financial relief for households. However, it says the end of government support initiatives may affect discretionary spending going forward.

In a trading update for the 13 weeks to 26 December, the value retailer reported year-on-year growth in retail sales and other income of 5% to R7.8 billion. Total retail sales increased by 5.8% to R7.5 billion while other income fell 16% to R253 million. Data from the Retailers' Liaison Committee (RLC) showed its share of the market grew 230 basis points in October and November. Following consecutive gains for the last six months, it said its total market share was the highest on record since the reinstatement of the RLC.

Mr Price Home showed the strongest growth, with sales up 11.1%, followed by Sheet Street and Mr Price Apparel. It said demand for household merchandise remained high as many employers encouraged their staff to work from home. Sales at Miladys declined by 10.4% over the period. It increased prices by an average 3.8%. Its gross profit margin fell by 50 basis points to 42.5% as the positive gains from lower markdowns were offset by foreign exchange impacts.

The retailer said its customers continued to prefer cash to pay for their shopping, with cash sales growing by 8.2% to make up 86.8% of total sales. Credit sales decreased by 7.6% as it remained conservative in granting credit to customers. It said there had been a positive take-up of the new lay-by option introduced by Mr Price Apparel.

Mr Price said the regression into an adjusted level 3 lockdown from last month had added further uncertainty and challenges to the country's economic recovery, with households likely to be cautious in their spending due to negative impacts on income and the cessation of government support initiatives affecting discretionary categories. Still, for the first three weeks of its fourth quarter, sales grew by 5.3%.

The retailer's shares rose 1.5% to R169.19 on Friday.

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