South African clothing retailer Mr Price Group has been praised for turning around its fortunes in a short space of time after losing its market share last year.
Chantal Marx, head of research at FNB Securities, said that Mr Price was doing things right and that the group’s strategy was paying off with good returns.
This comes after Mr Price on Tuesday said that it expected earnings for the six months ended 30 September 2017 to be 20-25 percent higher than those reported for the previous corresponding period.
The group’s two divisions – MRP Apparel and Milady’s – recovered well after under-performing in the previous financial year.
Marx said there were a “couple of unique” things that resulted in higher earnings for Mr Price despite South African retailers expecting to see single-digit growth in future as weak economic growth and international competitors continue to put pressure on consumer spending.
“Mr Price is coming from a relatively low base. In the last year, Mr Price lost a sizeable market share and now the base is less demanding, plus there has been good improvement during the winter season,” Marx said.
“Also, Mr Price has been investing in sourcing and distribution for the last two to three years. As a result, they have now removed the middle man by sourcing directly from China and they have grown their distribution centre in Durban to reduce costs.”
Marx said that Mr Price was also benefiting from improved clothing quality, seasonal sales, and low price points compared to other local and international retailers, which allowed consumers to spend even though they feel under pressure. (via African News Agency)