Mr Price: the red cap with a green share price

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Mr Price: the red cap with a green share price

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Published Date: 2021-11-26 | Source: INCE|Community | Author: The Finance Ghost

Mr Price: the red cap with a green share price

Mr Price has released interim results for the 26 weeks to the end of September (approximately - retail reporting calendars are based on weeks rather than calendar months).

The acquisition of Yuppiechef was effective on 1 August 2021. This remains a really interesting play in the local retail space, as Mr Price took a move up the LSM curve with this acquisition.

Retail sales increased 37.8% and market share increased by 210 basis points, so the top-line result looks great. Online sales now contribute 2.9% of the total. The sales performance was strong across all merchandise categories, with the Home segment outperforming the Apparel segment vs. pre-pandemic levels.

Interestingly, credit sales are still down vs. the pre-Covid period, albeit only slightly (-2.2%). Cash sales are 85.7% of total group sales.

Gross margin decreased 230 basis points because of R151.5m in inventory write-offs from the civil unrest. Without the unrest, it still would've dropped 100 basis points. The recent acquisitions (Power Fashion and Yuppiechef) trade at lower margins than the rest of the group, a fascinating reality considering those two businesses are at opposite ends of the LSM spectrum.

The group remains debt free and has a cash balance of R3.9 billion even after the recent acquisitions. That's a significant war chest.

Headline earnings per share (HEPS) increased 34.4% to 448.3 cents. The share price closed 3.95% higher as the market applauded this result.





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