Mr. Price: Summary of Annual Results For The 52 Weeks Ended 29 March 2025

Research Notes For 09 to 13 June > https://www.unum.capital/post/r0913june

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Analyst Disclosure: We asked A.I to summarize the group's results. Here are 20 key highlights: 

1. Mr. Price Group reported resilient financial results for the 52 weeks ended March 29, 2025, showcasing the strength of its fashion-value business model. The company saw its total revenue increase by 7.9% to R40.9 billion, successfully gaining 50 basis points of market share.

2. A key highlight was the expansion of the gross margin by 80 basis points to 40.5%, contributing to a record operating profit of R5.8 billion. This performance led to an operating margin increase of 20 basis points, reaching 14.2%.

3. The group's earnings per share also showed robust growth, with basic earnings per share up 11.0% to 1,416.3 cents and headline earnings per share increasing by 10.7% to 1,424.0 cents. Diluted headline earnings per share rose 10.1% to 1,379.3 cents.

4. Mr Price Group experienced a stronger second half of the financial year, with diluted headline earnings per share growing by 12.1%. This was achieved despite a challenging retail environment in February and the shift of school holidays and Easter.

5. The improved second-half performance was attributed to better sales momentum and reduced markdowns, following a more subdued retail climate in the first half. The group's ability to provide value to customers was a consistent factor across varying economic conditions.

6. In recognition of its strong performance, a final dividend of 593.5 cents per share was declared, representing a significant 12.7% increase from the previous year. This maintains the group's historical 63% dividend payout ratio of headline earnings.

7. The company reached a significant milestone, with revenue exceeding R40 billion for the first time. Retail sales specifically grew by 7.8% (9.9% in the second half), and the group successfully opened 184 new stores, increasing its weighted average space by 4.3%.

8. Cash generated from operations amounted to R8.7 billion, contributing to a healthy cash balance of R4.1 billion. The group remains debt-free, indicating strong financial health and effective cash management.

9. The group's omni-channel strategy proved effective, as both group store sales and online sales increased by 7.8% and 7.9% respectively. Momentum for both channels improved in the second half, with sales growing by 9.5% and 11.5%.

10. During the period, Mr Price Group surpassed 3,000 stores, reaching a total footprint of 3,030 across its 15 trading chains. The new stores delivered returns that exceeded the group's investment thresholds.

11. Cash sales continued to dominate, constituting 89.3% of group retail sales and increasing by 7.9%. While cautiously managed, the improving credit environment in the second half led to an increase in the group's credit approval rate.

12. The gross profit margin expansion to 40.5% was driven by strong merchandise execution and lower markdowns across all trading segments. Acquired businesses also showed an upward margin trajectory due to improved sourcing and operational efficiencies.

13. Profit from operating activities rose 8.9% to R5.8 billion, with a notable 11.7% growth in the second half. Despite a 10.0% increase in total expenses, the operating margin expanded to 14.2%, falling within the group's medium-term target range.

14. The Apparel segment performed strongly, increasing retail sales by 7.9% to R31.4 billion and gaining 50 basis points of market share for the second consecutive year. Divisions like Power Fashion and Studio 88 were key contributors to this growth.

15. The Homeware segment continued its recovery, with retail sales growth of 6.4% to R6.7 billion. All divisions within this segment showed accelerating sales growth and significant improvements in gross and operating margins.

16. The Telecoms segment delivered another year of market share gains, with combined retail sales from Mr Price Cellular and Powercell increasing by 13.2% to R1.3 billion. This segment, selling handsets and accessories, continues to boost profitability and customer engagement.

17. The Financial Services segment saw its revenue increase by 5.7% to R918 million. Despite a reduction in the repo rate, debtors' interest and fees increased, and the group maintained a prudent approach to credit granting.

18. Looking ahead, Mr Price Group acknowledges the uncertain global and domestic economic environment, including revised downward GDP growth forecasts for South Africa. The consumer environment remains volatile despite some short-term relief from lower inflation and petrol prices.

19. Despite these challenges, the group remains committed to its differentiated fashion-value merchandise and expects to outperform the market due to its proven business model and strong brand power. The focus will be on extracting maximum value from its trading chains and investing in strategic enablement projects.

20. For the first quarter of FY2026 (to May 31), group retail sales increased by 11.6%, with all trading divisions gaining market share in April 2025. The group plans significant capital expenditure for FY2026, focusing on new stores, revamps, supply chain, and technology, while also continuing to evaluate new growth opportunities.

Lester Davids

Senior Investment Analyst: Unum Capital