| Thu 17 Nov 2005, 9:03 | | Mr Price Group Limited - Mr Price Delivers Excelle |
|
Mr Price Group Limited - Mr Price Delivers Excellent Results For The Six Months
MR PRICE GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1933/004418/06)
ISIN: ZAE000026951
Share Code: MPC
("Mr Price" or "the company")
MR PRICE DELIVERS EXCELLENT RESULTS FOR THE SIX MONTHS
Headline eps +54%; Distribution per share up 84%
(Cape Town, 17 November 2005) Leading value retailer Mr Price Group has produced
excellent results for the six months ending 30 September, with an increase in
headline earnings per share of 54% to 48.5 cents and the distribution per share
up by 84%. to 24.3 cents.
CEO Alastair McArthur said that the sector as a whole had continued to benefit
from the buoyant economic conditions and sustained strength in consumer
spending. After an initial lag, cash retailers were now participating fully in
the upturn. The Group had performed well in these conditions, recording good
growth in revenue and operating profits.
Following the sale of The Hub and Galaxy Jewellers earlier this year, the focus
of the group"s continuing operations is now on four chains: Mr Price, Mr Price
Home, Sheet Street and Miladys. In respect of these continuing operations,
revenue was up 24% to R2.18-billion. All four chains in the group had shown
excellent growth in profitability, with combined operating profit up 54% to
R167.3 million and the operating margin up from 6.2% to 7.7%. Headline earnings
per share attributable to these continuing operations grew by 55% to 45.2 cents.
Comparable sales of these operations, which include expansions and renovations
in like-for-like locations, were 18 % higher. Cash sales for the continuing
operations remained constant at 89% of total sales compared to 85% for the total
group last year. The group is continuing with its expansion plans and average
trading space in the continuing businesses has grown by 10%. There were 732
stores in the continuing group at the interim stage.
Mr Price had performed extremely well and had grown revenue by 22% with
comparable sales growing by 20%. New and expanded departments had shown good
results.
"The introduction of "Everyday" wear has effectively extended the offer of Mr
Price from weekend wear to cover the rest of the week. The customer response to
our smarter clothing ranges has been superb," said McArthur.
Mr Price Home grew revenue by 26% with comparable sales up 16% and the
introduction of furniture has been well received by customers. Two ultra-stores
with trading areas in excess of 2000 square metres accommodating a more
comprehensive presentation of the new furniture ranges opened in August in
KwaZulu Natal, followed by one in Gauteng in late September. Early results are
very positive and a further ultra-store will be opening in Gauteng in late
November.
Sheet Street increased revenues by 31% with comparable sales growth of 16%.
"Sheet Street has tightened its focus by eliminating lower priced hard goods
items and is trading very well. We have clearly delineated the playing fields
in terms of target customers for Home and Sheet Street and each business is now
a major brand in its respective niche in the market," added McArthur.
Milady"s increased revenues by 21% with a comparable sales growth of 17%. The
co-ordination of ranges has been enhanced and more value introduced, while the
Milady"s revamp programme is improving the total offer to customers. 21 New
stores were revamped in the first half and a further 29 will be renovated in the
second half.
McArthur said the group"s balance sheet remains strong with cash resources of
R525-million and a further R182-million due to be received for the sale of The
Hub and Galaxy divisions. "The strong balance sheet is allowing us to grow our
existing businesses aggressively and will fund the credit offer in the current
cash retail chains."
"We are taking the roll-out of credit in these businesses gradually," said
McArthur. "The demand is there and so is the profit improvement, but we need to
see the payment patterns before fully rolling it out. A gradual introduction of
credit will assist the group in the event of any softening in trading over the
next few years. Notwithstanding the introduction of credit in the cash chains,
which will increase our market share, we will remain a predominantly a cash
retailer."
McArthur said the sale of The Hub and Galaxy had tightened the focus of the
business. "It means, for example, a third fewer divisional board meetings and
merchandise reviews. Our management team are now using that time to give more
attention to the major profit producers in our group, which still have enormous
growth potential.
"Suggestions have been made in the past that our business was reaching
saturation but this couldn"t be further from the truth. The fact is that our
chains are largely under-spaced and, as announced at the end of the last
financial year, our plan is to increase space by 50% over a period of five years
to resolve this. Our customers, buyers, market researchers and operations
teams are all calling for less cramped and more spacious stores. Whenever we
respond by expanding space, both sales and profits jump," said McArthur.
Looking forward, McArthur said that trading in the first six weeks of the second
half had been good. "A favourable October normally indicates a good Christmas,
so we are positive about the festive season. Although we have a higher base in
the second half, we are well positioned to report a further growth in earnings
at the end of the financial year."
ENDS
For further information, please contact Tamra Veley on 083 251 3658 or 021-426
1233.
Date: 17/11/2005 09:03:42 AM Produced by the JSE SENS Department
