Mr Price’s sales indicate that positive consumer sentiment was created by the formation of the Government of National Unity (GNU) last month, and this also translated into higher balances at retail store tills.
The budget clothing and homeware retailer’s sales picked up sharply by 12.7% in June, the last month of its first quarter trading period, compared to the market’s growth of 10.3%, the group said in a trading statement yesterday.
In June, following the formation of GNU, positive consumer sentiment had supported improved sales performance across the sector, the group directors said.
During April and May, the group’s retail sales grew by only 0.9% compared to the comparable market’s decline of 4.6%.
“Pleasingly, these sales trends were similar across all trading segments. Gross margin percentage increases were achieved in every division during the period, due to lower markdowns, resulting in more full-priced merchandise sales, supporting the focus on profitable market-share gains,” the retailer’s directors said.
However, despite the positive outlook the group anticipated that the medium term would likely remain challenging for consumers, at least until key relief factors come into effect.
“Lower inflation, interest rate cuts and the two-pot retirement system all support a better consumer-spending environment,” they said.
The events were only likely to impact real wage growth and consumer expenditure towards the end of 2024, and into 2025.
Group retail sales for the first quarter to June 29 grew 4.6% to R8.5 billion, ahead of the total comparable market’s sales decrease of 0.2%.
The comparable market’s 0.2% decline had been a reflection of four consecutive months of lower sales until the end of May. Both Mr Price and the market’s sales were below the 5.2% inflation growth reported for April and May, this year.
Mr Price’s directors said they had gained market share for 11 consecutive months, and on a 12-month rolling basis had gained just over R1.1bn in market share.
The group previously reported in its annual results that trade in April and May, 2024 – the first two months of the 2025 financial year had been subdued due to the “operating environment”.
The three recent acquisitions delivered the highest sales growth in the business.
Directors said while the prospect for higher economic growth appeared promising, household finances were under pressure. High interest rates, rising debt and elevated food inflation continued to impact disposable income.
In addition, the retail sector was impacted by the movement of Easter and school holidays into March, 2024 impacting sales in April, 2024. Higher average temperatures in April and May, 2024 also delayed consumer spend on winter merchandise.
The late onset of cold weather in June, 2024 was supported by pent-up consumer demand for winter merchandise. The sector was also impacted by the national elections, as consumers withheld spend in anticipation of the election results.
Group comparable store sales increased 0.1%. Other income increased 9.3% to R321 million due to a higher average debtors’ book, while debtors’ interest and fees increased 6.6%.
Total store sales increased 4.6% while online sales which contributed 2.4% to retail sales increased 3.8% in the quarter, and accelerated to double-digit growth-levels in June, driven by Mr Price Apparel.
The e-commerce strategy was focused on a blended retail offering, aligned with most South African consumers’ preference for online browsing and in-store purchasing, the group said.
Group retail selling price (RSP) inflation came to 2.2% and total unit sales increased 2.4%.
The store footprint increased by 35 stores – the total footprint expanded to 2 935 stores.
Demand for new accounts was high, up 42.7%. However, the group approval rate was low at 18.7% due to a measured approach to credit granting.
In the first quarter, apparel segment sales grew 4.4%, home segment sales increased 3.7%, telecoms sales were up 13.3%, bringing group sales up by 4.6%. Apparel sales accelerated to 13.6% in June.
BUSINESS REPORT