Mr Price’s share price fell 7.15% on Friday ahead of the release of its results on Monday morning after competitor Woolworths warned there had been a price war among clothing chains clearing winter stock.
Operating profit in Mr Price’s apparel division was down 26.7% to R779m on a 0.3% sales decline to R6.3bn for the 26 weeks to October 1 compared with the year-earlier period, the company said in its interim results statement on Monday.
"We should have taken winter markdowns earlier," said CEO Stuart Bird. "Our assortments and marketing should also have been more focused on value rather than fashion in this climate."
The group’s Miladys chain performed well below expectations and was undergoing a change in merchandise fashion pitch to refocus on its core customer, Bird said.
Operating profit in Mr Price’s home division, on the other hand, jumped 20.4% to R364m while sales grew 2.3% to R2.3bn.
Its financial services and cellular division grew operating profit 4.1% to R181m while sales jumped 27.2% to R524m.
The group’s overall interim revenue grew 1.5% to R9.2bn while aftertax profit fell 13.9% to R921m.
Mr Price cut its interim dividend by 8% to 228.2c.
Cash sales were up 1.9% and constituted 82.6% of total sales, while the introduction of new credit regulations in September 2015 continued to affect credit sales, which were down 6.2%. Selling price inflation was 11.4% and unit sales were 10.2% lower.
The retailer said in its results statement that it was in a R74.4m dispute with the South African Revenue Services (SARS). The dispute dates back seven years when SARS claimed Mr Price was liable for a R43.6m tax bill owed by one of its suppliers.
Mr Price said it took SARS five years to respond to its original response to the demand, and it "is now awaiting correspondence from SARS detailing a list of the facts or issues which they deem to be in dispute".
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