By Nqobile Dludla
JOHANNESBURG (Reuters) -South Africa’s Mr Price, a budget fashion and homeware retailer, reported on Thursday a 6.7% rise in full-year earnings, but warned local supply chain challenges will add pressure in the short term.
Retailers in South Africa are struggling to get products shipped into the country quickly to their stores and factories due to backlogs at local ports, owing to factors including under-investment in equipment and maintenance.
Mr Price said the global and domestic supply chain disruptions “caused challenges to optimal inventory management,” but it had leveraged its nimble supply chain model to minimise the disruptions experienced during the holiday period.
“Supply chain challenges in the form of port inefficiency and increasing shipping costs will add pressure in the short term,” the retailer said.
“However, the acquisition of port equipment by Transnet which will take some time to become operational, is encouraging,” it added, referring to the state-owned port operator.
Against the backdrop of a weak consumer environment as elevated inflation levels continued to impact its core customer base of low to middle-income households the most, Mr Price reported headline earnings per share of 1,286.2 South African cents for the 52 weeks ended March 30.
Operating profit growth rose 7.9% to exceed 5 billion rand ($272 million) for the first time, the retailer said.
It attributed the result to significantly improved sales momentum in the second half, after the first half was weighed down by power cuts that caused it to lose about 226 million rand in revenue as it lost trading hours.
Mr Price, which also sells sports clothing and equipment, reported better-than-expected revenue growth of 15.5% to 37.94 billion rand. Six analysts had expected revenue to rise to 37.02 billion rand, according to data from LSEG.
Retail sales grew by 16.2% to 36.6 billion rand, with comparable store sales inching up by 1.8%.
Mr Price said the later arrival of cold weather during this year’s winter season had resulted in subdued trade in the first two months of its new financial year, but sales growth recovered strongly in early June as temperatures dropped.
($1 = 18.3823 rand)
(Reporting by Nqobile Dludla; Editing by Jamie Freed and Kim Coghill)
