Mr Price shares surge on higher profits and pick up in sales
H1 headline earnings per share up 7.1% to 481.8 cents
Sales up by double digits in October, early November
Company sees pressure on consumers easing
Shares hit record high
Updates with CEO comment on inventory
By Nqobile Dludla
JOHANNESBURG, Nov 21 (Reuters) -South African budget retailer Mr Price MRPJ.J reported a 7.1% rise in first-half earnings on Thursday and said early holiday season sales were up by a double digit percentage, sending its shares as much as 9.5% higher.
Mr Price, which sells fashion and homewares as well as sports clothing and equipment, also said it expected the economic and consumer pressures experienced in the first half would begin to ease.
"Lower inflation, interest rate cuts and the implementation of the two-pot retirement system will buoy disposable income and discretionary spending," Chief Executive Mark Blair told investors, referring to a new rule that allows early withdrawals from pension funds.
Mr Price reported headline earnings per share of 481.8 cents for the 26 weeks ended Sept. 28. Total revenue rose 5.2% to 17.6 billion rand ($971 million), with group retail sales up 5.1% to 16.9 billion rand.
Comparable store sales rose 0.4%, an improvement on the 0.8% decline in the same half last year.
At 1404 GMT, Mr Price shares were up 7.24% at 292 rand, after hitting a record high of 298.94 rand.
Blair said early signs of a recovery in the retail environment were seen in the second quarter, with improving sales growth in all three months.
In a positive sign for the key holiday quarter, sales rose 11.5% in October and 14.7% in the first two weeks of November.
Meanwhile, efforts to minimise global supply chain disruption - and local port congestion due to the lack of sufficient equipment to handle cargo coming in - saw the company's gross inventory up 13.6% at the end of the first half. Excluding goods in transit, it was up 9.5%.
Blair told reporters that Mr Price was in "a very good stock position to trade December".
"This year, knowing that the supply chain disruptions weren't really going to improve in the short term, we had a much longer runway to sort of plan for it, so no nasty surprises expected that we're out of stock or anything like that," he added.
($1 = 18.1243 rand)
Sales growth shows increasing momentum post H1 https://reut.rs/3AGNvFb
Reporting by Nqobile Dludla. Editing by Subhranshu Sahu and Mark Potter
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