Mr P share price boosted by strong results, increased dividend and market share gain

Key takeaways

1. Strong Revenue Growth: Mr Price Group Limited reported a 15.5% increase in revenue, excluding the contribution from the Studio 88 Group acquisition, revenue grew by 5.8%.
2. Earnings and Dividend Performance: Basic and headline earnings per share increased by 5.4% and 6.7% respectively. A final dividend of 526.8 cents per share was declared, up 17.8%, maintaining a 63% payout ratio.
3. Operational Highlights: The group faced significant challenges, including 65,000 lost trading hours due to loadshedding, resulting in a revenue loss of approximately R226 million. Despite these challenges, Mr Price opened 238 new stores, bringing the total to 2,900 stores. The group also increased units sold by 3.8%, with 50% sourced locally.
4. Profit Margins and Expense Management: Gross profit margin increased by 20 basis points to 39.7%, with merchandise GP margin expanding to 40.5%. Operating profit exceeded R5 billion for the first time, driven by effective stock management and the agile supply chain.
5. Positive Outlook and Strategic Focus: Looking forward, the group plans to open 200 new stores in FY2025 and expects consumer relief from moderating inflation and decreasing interest rates. The balance sheet remains healthy with R2.8 billion in cash.

Revenue Growth & Increased Market Share

Mr Price Group Limited, for the 52 weeks ended 30 March 2024, reported a notable increase in revenue by 15.5%, reaching R37.9 billion. This growth includes contributions from the recently acquired Studio 88 Group. Excluding this acquisition, revenue grew by 5.8% to R30.3 billion. Despite facing a challenging retail environment, Mr Price managed to grow its annual market share by 30 basis points and achieve an operating profit exceeding R5 billion for the first time. The impressive results are attributed to a strong second half performance, significantly improved sales momentum, and strategic market expansions.

Earnings and Dividend Performance

The financial performance of Mr Price was solid with basic and headline earnings per share rising by 5.4% and 6.7% respectively, reaching 1,276.2 cents and 1,286.2 cents. Diluted headline earnings per share saw a notable increase of 6.3% to 1,252.6 cents. The group declared a final dividend of 526.8 cents per share, up 17.8%, maintaining a payout ratio of 63%. This performance underscores the company's resilience and effective strategies in navigating a volatile trading environment while delivering value to shareholders.

Strategic Expansion and Future Outlook

Mr Price Group's strategic initiatives included opening 238 new stores, bringing the total to 2,900 stores across various regions. The group saw a 3.8% increase in units sold, with a significant portion sourced locally, demonstrating a commitment to near sourcing. The group also achieved a gross profit margin increase to 40.6% in the second half, driven by focused stock management and supply chain optimization.

Looking ahead, the group plans to focus on enhancing customer service levels, investing appropriately to meet customer expectations, and opening approximately 200 new stores in FY2025. Despite potential supply chain challenges and economic pressures, the group anticipates consumer relief from moderating inflation and decreasing interest rates, along with boosts in discretionary spending. This strategic focus positions Mr Price to continue capturing market share and maintaining strong financial health.

Mr Price – technical view

The share price of Mr P is continuing its uptrend with a strong upside break of the 18815-resistance level. 19980 and 20375 respectively, become the next upside resistance targets from the move.

Trend followers would keep a long bias to trades on the company, while looking for entry into pullbacks from new short-term highs.