By Nqobile Dludla
JOHANNESBURG (Reuters) -South African budget fashion retailer Mr Price on Friday reported a 34% surge in third-quarter sales boosted mostly by a recent acquisition, but investors fretted over its underlying performance as sales growth excluding the deal slowed.
Mr Price shares tumbled by 10.08% to 159.55 rand, a 2-1/2 week low, at market open.
The group’s retail sales and other income grew to 12.4 billion rand ($718 million) for the quarter to Dec. 31, the highest third-quarter sales in its history, the clothing and homewares retailer said.
Retail sales grew 36.5%.
Mr Price acquired branded footwear and clothing company Studio 88 Group in 2022 to gain further exposure to a younger consumer market with more spending power and taste for branded sneakers and T-shirts.
However, excluding the impact from Studio 88, group retail sales rose by just 1.2% as “inflation and rising interest rates and negative real wage growth” hurt consumers, Mr Price said.
Severe power cuts also affected peak holiday trading as the sector lost significant trading hours, it added.
“The group has taken urgent steps to limit the effect of loadshedding, albeit at considerable cost,” it said.
Mr Price has been on an acquisitive spree since 2020, snapping up chains from budget clothing to upmarket kitchenware, purchases that have significantly boosted sales at a time when consumers are cutting back on buying clothes and sofas at its core brands.
Mr Price warned that the challenging consumer environment is expected to continue well into next year while power cuts are anticipated to worsen.
Upmarket peer Woolworths reported a 18.5% rise in half-year turnover and concession sales on Thursday, helped by bumper Black Friday sales, festive demand and eased lockdown restrictions in Australia.
($1 = 17.2761 rand)
(Reporting by Nqobile Dludla; editing by Sherry Jacob-Phillips and Jason Neely)
