January 18, 2005

By Thabiso Mochiko

Johannesburg - The consumer shopping spree over the festive period had helped clothing, jewellery and homeware retailer Mr Price to grow its total sales by 15.5 percent in the third quarter to December compared with 13 percent in 2003, the group said yesterday.

The share price responded positively to the news, increasing by 2.27 percent to close at R11.25. The general retail sector lost 0.67 percent.

Mr Price's cash division - Mr Price Weekend Material, Mr Price Home and Sheet Street - grew sales by 15.4 percent compared with 14.5 percent in 2003, while the credit division - Miladys, The Hub and Galaxy - grew sales by 15.6 percent from 8.5 percent in the previous period.

Evan Walker, retail analyst at Andisa Securities, said Mr Price's sales increase was ahead of market expectations.

"Mr Price has traded ahead of other cash retailers ... but probably slightly below some of the credit-based retailers," Walker said.

The group's Home chains, Mr Price Home and Sheet Street, reported sales growth of 24 percent for the third quarter.

Mr Price said Mr Price Weekend Material performed well following improvements in merchandise and marketing, growing sales by 11.5 percent in the third quarter with 3.1 percent inflation.

Miladys' sales increased by 19.5 percent during the third quarter despite deflation of 7.3 percent caused by mix changes and the introduction of lower price points.

Sales at The Hub grew 8.8 percent, with marginal deflation, and Galaxy was standing high at 16 percent, with inflation of 7.1 percent.

The group, which has 539 stores under its cash division and 259 stores operating under the credit division, said the third quarter reflected marginal selling-price inflation of 4.4 percent, mainly as a result of changes in merchandise mix.

According to Statistics SA, retail sales grew by 16.7 percent to R27.59 billion in the first 10 months of 2004.

The group expects the positive trading environment to continue into the final quarter.

Mr Price said sales for the first three weeks of January had been "good" and it was on track to achieve its stated target of a 10 percent operating margin on sales of R6 billion by 2007.

"I don't think its going to come off, the momentum is still there for a much longer period," said Walker.

Last week, Edgars Consolidated Stores reported a 24 percent increase in sales for the third quarter to December, and Woolworths Holdings' sales rose 11 percent in the same period.