Mr Price full year 2023 results halt share price decline
Mr Price has navigated the challenging trading conditions and emerged with a strong performance, driven by strategic acquisitions and a focus on cash sales.
Salient features
Mr Price's FY2023 revenue increased by 17% to R32.9bn, largely due to the acquisition of 70% of the Studio 88 Group, which added 778 stores to their group.
Loadshedding had a significant impact on sales during the festive period, resulting in EBITDA only increasing by 5.4% to R7.2bn.
Basic and headline earnings per share declined, with diluted headline earnings per share decreasing by 6% against a demanding base of 19.5%.
The gross profit margin declined by 150 basis points to 39.5%, primarily due to higher markdowns and increased input prices.
Mr Price plans to roll out a new standalone concept, Mr Price Kids, which combines their Baby and Kidswear departments and has identified 300 potential locations. They also plan to allocate approximately R1.2bn in capital expenditure towards new store development, store revamps, and back-up power solutions.
MR PRICE REPORTS RESULTS FOR THE 52 WEEKS ENDED 1 APRIL 2023
Mr Price (MRP) released its FY2023 year-end results for the 52 weeks ended 1 April 2023, reporting a 17.0% increase in group revenue to R32.9bn. The acquisition of 70% of Studio 88 Group (S88) on 4 October 2022 contributed significantly to this growth, raising the total number of stores in the group to 2,702. The three recent acquisitions experienced double-digit sales growth and enhanced group earnings. However, a significant increase in load shedding heavily impacted the festive trading months, resulting in an annual EBITDA increase of only 5.4% to R7.2bn.
Basic and headline earnings per share declined by 6.8% and 6.0% respectively, while diluted headline earnings per share decreased 6.0% against a demanding base of 19.5%. A final dividend of 447.1 cents per share was declared, maintaining the 63% pay-out ratio.
Group retail sales grew 18.0% to R31.5bn, with comparable store sales decreasing 3.4%. Excluding S88, retail sales rose 2.1% but declined 0.9% in H2 FY2023 due to the factors mentioned above. Other income decreased 1.0% to R1.2bn, impacted by prior period insurance proceeds, predominantly from civil unrest claims. Excluding insurance proceeds, other income grew 18.0%.
Total store sales, contributing 97.5% to retail sales, increased 18.5% (excluding S88: 2.2%). Online sales rose 3.2% (excluding S88: 1.8%), off a strong growth of 48.2% in the prior period. Total unit sales increased 2.7% (excluding S88: -2.0%). Group RSP inflation reached 15.0%, impacted by higher price point merchandise in S88.
The trading period witnessed an extended consumer credit cycle as household disposable income faced pressure due to rising inflation. The group's core customer typically prefers cash transactions, contributing 87.3% of group retail sales during the period. Cash sales growth of 19.7% was bolstered by the inclusion of S88 (up 1.2% excluding S88), while credit sales grew 8.3%.
The gross profit margin declined by 150 basis points to 39.5%. Higher markdowns, increased input prices due to global inflation effects, currency depreciation, and the inclusion of high growth, lower margin acquisitions impacted the gross profit margin.
The store footprint increased by 1,000 stores during the period due to 171 new stores from the core business, 51 from S88, and 778 acquired S88 stores. Trading space increased 16.9% on a weighted average basis and 28.0% on a closing basis (excluding S88: weighted average 5.7%; closing 5.8%).
In summary
Mr Price has navigated the challenging trading conditions and emerged with a strong performance, driven by strategic acquisitions and a focus on cash sales. The group's expansion plans and commitment to improving its store footprint and online presence signal a positive outlook for future growth. Traders would be wise to keep a close eye on this retail powerhouse as it continues to innovate and adapt in an ever-changing market landscape.
Mr Price – technical view
The long-term trend for Mr Price remains down although there has been a bullish push in the price action over the near term.
Traders looking for long entry might prefer to wait for a break of the confluence of trend line and horizontal resistance around the 14850 level, before targeting a move to resistance at 15945.
Until a break of resistance is confirmed, the downside trend bias remains in play, although this trend is looking quite mature. A continuation of the longer term down trend would be considered with a break below the 13400-support level, in which case, a retest of the recent low (12400) would be favoured.
This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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