Mr Price Group’s shares rally on annual results

Mr Price Group’s shares opened sharply higher on Friday after the company raised its annual dividend thanks to better earnings.

The retailer said headline earnings per share (Heps) in the year to end-March rose 6.2%, slightly less than expected. The group was expected to report a 6.7% increase in Heps, FNB Securities said in a note last week, citing Bloomberg data.

But Mr Price’s shares were 5% higher at R186.50 in early trade.

“We are pleased to be able to deliver solid earnings growth and increase our dividend to shareholders in what has been a very tough year for retail,” said CEO Mark Blair.

“Despite this, both our apparel and homeware segments outperformed the market and gained market share on an annual basis,” said Blair, who took over as CEO in January.

Mr Price raised its dividend per share by 6.2% to 736.2c.

Total revenue grew 5.8% to R22.6bn, with retail sales increasing 4.4%, or 1.6% on a comparable-stores basis, to R20.9bn.

But the group’s gross profit margin declined by 40 basis points to 42.9% after the apparel division’s fourth-quarter markdowns offset prior margin improvements.

Mr Price said SA’s national elections yielded “a positive outcome” that could lead to reformed economic policies that encourage business growth and job creation.

“Hopefully this could be the start of an upward swing in the retail cycle, but any improvements are expected to be gradual and we are therefore anticipating a very tough first half of the new financial year,” Blair said.

“The second half should see an improvement due to the base effect and impact of internal initiatives coming through.”