Net income in the six months through Sept. 28 advanced to 747 million rand ($72 million) from 605 million rand a year earlier, the Durban-based company said in a statement today. Sales increased 15 percent to 7.2 billion rand.
“We focused on avoiding chasing credit sales to drive top-line growth and are pleased that cash sales growth of 15.1 percent exceeded credit sales growth of 11.6 percent,” Mr Price said in a statement. “The performance is against a backdrop of low consumer confidence in a challenging retail environment, caused by slowing real wage and credit growth.”
Consumer confidence in Africa’s largest economy dropped to a 10-year low in the third quarter as higher inflation curbed spending. Truworths International Ltd. (TRU), South Africa’s largest listed clothing retailer that generates 71 percent of its sales in credit, said last week that revenue growth slowed in the 18 weeks through Nov. 3. Mr Price cash sales made up almost 80 percent of total revenue, the company said.
Mr Price shares rose as much as 2.8 percent, the most since Oct. 28, and traded 2.5 percent higher at 150.80 rand as of 3:37 p.m. in Johannesburg. The stock has gained 7.7 percent this year, compared with a 12 percent decline in the 11-member FTSE/JSE Africa General Retailers Index.
“Mr Price cash sales are high and this means they have been able to consistently put good results on the table,” Henre Herselman, a derivatives trader at Nedbank Private Wealth in Johannesburg, said by phone today. “These earnings are brilliant, considering the current retail sector sentiment.”
The company raised its interim dividend 26 percent to 1.68 rand a share.
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