South Africa's Mr Price H1 earnings rise 12 percent, shares up

Higher apparel and homeware sales buoyed South African clothing retailer Mr Price Group Ltd’s half-year earnings by 11.6 percent, sending its shares 5 percent higher.

Mr Price, known for its no-frills clothing and furniture stores, has grown for more than three decades by undercutting competitors and catering to thrifty shoppers’ fashion needs.

South African retailers have struggled to lift earnings this year in the recession-bound economy as elevated household debts, higher fuel prices and an increase in value-added tax have squeezed consumer income.

Mr Price’s Chief Financial Officer Mark Blair said declining gross domestic product growth in South Africa and other factors were likely to make trading conditions difficult for South African retailers.

“Despite this, we remain confident that our fashion value business model is well positioned to capture further market share,” he said in a statement.

The firm posted headline earnings per share (HEPS) of 494.3 cents for the six months ended September, compared with 442.9 cents a year earlier. Diluted HEPS rose 11.1 percent.

Headline earnings per share is the main profit measure in South Africa and strips out certain one-off items.

Mr Price said retail sales increased 6.6 percent to 9.7 billion rand ($697 million), while comparable store sales rose 3.9 percent.

The retailer’s shares had risen 5.04 percent to 248.90 rand by 1007 GMT.

“In this type of consumer environment, the results they came through with are certainly very positive and we can see a nice rise in the share price as a result,” said Wayne McCurrie, FNB Wealth and Investments portfolio manager.