FY 2022
- Mr Price reported record profits for the full-year to April 2022 and managed to increase market share, despite a challenging macro-economic backdrop.
- The improvement in margins was thanks to the successful acquisition of Power Fashion, which serves the lower end of the market. This is a lucrative segment of the retail apparel market, in an era where price affordability has proven to be a successful formula for the group.
- Mr Price’s acquisition of Yuppie Chef, a kitchenware brand is a new market niche for the group and was identified as a potential growth segment of the market. Mr Price’s potential deal for footwear chain Studio 88, with 710 outlets, which is awaiting competition board approval, and is another area with growth potential, further diversifying the groups’ business model.
- The current acquisitions have annual sales of around R2.5bn are expected to increase to R7.5bn by 2027. This could increase earnings by 10%, with Power Fashion targeting the operation of 500 outlets countrywide.
- The group has also identified Cellphones and financial services as a potential area of growth, reflecting management’s ability to identify additional opportunities. This strategy of selective acquisitions has resulted in a track record of consistent growth for the company.
- Group operating profit of R4.95bn is testament to the groups operational strategy, with revenue up by 23% to R28bn, and net profit increasing by 26.5% to R3.5bn. Mr Price has a strong balance sheet with R4.5bn cash, which enabled to raise the dividend 25.9% to 807.7c.
- Online apparel sales, have increased by 48%, but are only 2.9% of total sales. The company expects growth in the click and collect format.
- Mark Blair, the group CEO, said sales in April and May were slower than expected as consumers fret over escalating petrol and food costs. June trade appears somewhat better though. Mr Price is a high-quality company, and the shares can be accumulated into weakness for long term investors. We hold shares of Mr Price in client segregated portfolios.