Mr Price posts third-quarter sales growth of 10.4%

While smaller fringe retailers have found themselves increasingly marginalised, established retailers such as Mr Price are delivering strong sales growth despite concern about the indebtedness of consumers and their unwillingness to spend.

Mr Price's trading update follows Massmart and Shoprite both announcing promising sales updates this week.

Good performance

Danie Pretorius, an analyst at RMB Morgan Stanley, said that "as expected" established retailers such as Mr Price performed well, fresh out of SA's latest recession, while weaker, fringe players had been sidelined.

Consumers had stayed loyal, especially those who received wage increases that were well above inflation last year.

Mr Price said sales growth of 7.5%, 10.7% and 12% was achieved in October, November and last month respectively.

The group's largest chain, Mr Price Apparel, achieved sales growth of 12.8% last month, off a high base set in December 2009, when sales rose 16.4%. Comparable sales for the third quarter to end-December rose 7.9%.

Comparable store sales are a measure of productivity in revenue, used to compare sales of retail stores that have been operating for a year or longer.

Debt levels down

The group also highlighted that its collections from debtors had been much better than expected, with bad debt levels easing relatively more than was the case in the six months to September last year.

Mr Pretorius said it was important to note there had been "an impressive improvement in Mr Price's margins". It imports many of its sale goods, so SA's strong rand may have helped it in sourcing its products, he said.

The group's home division, Mr Price Home and Sheet Street, had managed comparable sales growth of 12.7% for the year's third quarter.

Over the border

"It's a very good number on a same-store basis. It seems Mr Price has created a strong formula for expansion," he said.

Durban-based Mr Price has 42 stores outside SA and franchise agreements with another 24.

These operations are in Ghana, Zambia, Tanzania and Kenya, and last year chairman Alastair McArthur said the group was keen to expand into Nigeria.

Source: Business Day