| Thu 25 May 2006, 8:01 | | Mr Price Group Limited - Mr Price Reports Excellen |
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MPC
MPC
Mr Price Group Limited - Mr Price Reports Excellent Year End Results
Mr Price Group Limited
Incorporated in the Republic of South Africa
Registration number 1933/004418/06
ISIN: ZAE 000026951
JSE share code: MPC
MR PRICE REPORTS EXCELLENT YEAR END RESULTS
Sales exceed R5-billion for the first time
Operating profit from continuing operations up 53%
Core headline EPS up 46%
Target operating margin of 10% already reached
R1-billion to be invested in new stores, concepts, expansions and revamps over
the next five years
Compound annual growth in EPS over the past 20 years was 24%
(Cape Town, 25 May 2006) Value retailer Mr Price Group today released excellent
results for the 53 weeks ending March 2006, with core headline earnings per
share up by 46 % and retail sales exceeding R5-billion for the first time.
CEO Alastair McArthur said that there had been strong growth in consumer
spending in South Africa over the past few years and that the Mr Price Group,
having launched its expansion strategy four years ago, had been well positioned
to meet this growing demand.
The four retail chains - Mr Price, Mr Price Home, Miladys and Sheet Street - all
showed strong improvements in profitability during the year under review. This
performance had more than compensated for the loss of profit contribution from
the non-core Hub and Galaxy chains, which were sold during the year.
McArthur said cash retailers were now benefiting fully from the trading
conditions which initially favoured credit-oriented chains. "Notwithstanding the
introduction of credit into our three cash chains, we remain a predominantly
cash retailer with cash comprising 89% of sales. Our forecasts indicate that
even with the roll-out of credit in the cash businesses, the majority of sales
will remain on a cash basis."
Revenue from the continuing operations grew by 24% to a record R5 billion.
Revenue for the comparable 52 week period was 22% higher with comparable sales
growing by 15%. Operating margins increased in all retail chains with the group
growing its operating margin for the 52 weeks to 10.2%, a target which had
originally been set for the 2007 financial year. Operating profit from
continuing operations was 53% higher at R534-million. Headline earnings per
share rose by 49% to 161.7 cents off the restated base of 108.8 cents.
During the past year, the group had sold its non-core operations (The Hub and
Galaxy) and had made accounting restatements in relation to participation in
export partnerships in terms of IFRS, which made comparisons with the previous
year difficult. However, the core headline earnings per share, which excluded
the impact of these two factors, had increased by 46% from 104.4 cents in the
previous financial year to 152.2 cents for the year under review.
The total distribution of 81 cents per share based on a cover of 2.0 times
represented an increase of 35% on last year"s 60 cents. "The compound annual
growth in the distribution to shareholders over the past five years has been
46%," said McArthur.
The Mr Price chain lifted sales on a like for like period by 17% to R2.6-
billion, with comparable sales 14.6% higher. Improvements in merchandise
assortments and delivery, coupled with excellent fashion interpretations
resulted in a strong profit performance. This positive performance had continued
into the new financial year.
Miladys retail sales (like for like period) were 21% higher at R760-million with
comparable sales growth of 14.8%. The store revamp programme had proved
extremely successful with renovated stores recording a marked improvement in
sales levels and branch profitability.
Mr Price Home grew comparable period retail sales by 28% to R1.1 billion with
comparable sales being 14.8% higher. The recently opened ultra stores - all
larger than 2,500 square metres carrying a wider assortment of furniture - had
proved to be very successful.
Sheet Street increased same period retail sales 37% to R460-million and with
comparable sales were 16.7% higher and showed a strong profit improvement. The
chain opened 38 stores and closed 5 during the year.
Looking at the profit performance of the two business segments, McArthur said
that operating profits from the apparel chains had grown by 41% while that of
the home chains had increased by an excellent 72%. "Our home chains, which are
younger businesses, are now getting into their stride and I am really pleased
with their results. The apparel result is also very good given their higher base
and the competitive arena in which they trade."
McArthur said the group"s balance sheet remained strong with cash resources of
R625-million, which together with future cash flows would allow the group to
continue its expansion programme.
"Our growth strategy is working well. Our customers have responded strongly to
the updated and enlarged stores which allow enhanced assortments, better product
presentations and a more comfortable shopping experience, resulting in more
profitable stores. We are planning to extend the strategy and will invest more
than R1-billion in new stores, expansions, revamps and new concepts over the
next five years." he said. "This will create another 4000 new jobs in the
company."
McArthur said that the testing of credit in Mr Price, Mr Price Home and Sheet
Street throughout KwaZulu-Natal and the Eastern Cape, and more recently the
Western Cape, had been positive, with the rise in average basket size driving
additional sales. A national rollout has now commenced, expected to be completed
within the first half of the new financial year.
McArthur said that the credit testing initiative would counter any softening in
consumer spending that might occur. He added that credit is tightly controlled
in the group with bad debts at 1.1% of credit sales and 2.6% of the debtors book
over the past financial year.
Looking forward, McArthur said that trading in April and May had been good.
Prospects for the group for the coming year were positive and another year of
earnings growth was anticipated.
"We have very exciting and innovative plans for the next few years and we remain
committed to our 2010 targets of sales of R10 billion with an operating margin
of over 10%," he said.
"The group"s compound annual growth in earnings per share over the past 20 years
has been 24%. Our plan is to try and maintain that fine track record in the
years ahead."
ENDS
For further information, please contact Tamra Veley on 083 251 3658.
Date: 25/05/2006 08:01:30 AM Produced by the JSE SENS Department
