Mr Price Group Ltd (MRPLY) Full Year 2025 Earnings Call Highlights: Strong Financial ...
Revenue: Increased 7.9% to ZAR40.9 billion.
Gross Profit: Increased 9.9% to ZAR16 billion with a GP margin growth of 80 basis points.
Expenses: Grew 10% to ZAR11.3 billion.
Operating Profit: Increased 11.7% in the second half.
Profit Before Tax: Increased 11%.
Profit After Tax: Increased 10.7% to ZAR3.7 billion.
Net Finance Expenses: Decreased by 6.2%.
Store Openings: 184 new stores, totaling 3,030 stores.
Cash and Cash Equivalents: Up 48% to ZAR4.1 billion.
Market Share Gains: 50 basis points increase.
Apparel Segment Sales: Grew 7.9%, with a 9.8% increase in the second half.
Homeware Segment Sales: Contributed 16.9% to total sales, with a 7.7% growth in the second half.
Telco Segment Sales: Grew 13.2% for the full year.
Cash Generated from Operations: Increased 8.7% to ZAR8.5 billion.
Final Dividend: Increased by 12.7%.
HEPS Growth: Double-digit growth for the financial year.
Warning! GuruFocus has detected 6 Warning Signs with MRPLY.
Release Date: June 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Mr Price Group Ltd (MRPLY) reported a strong start to the new financial year with April and May sales growth of 11.3% and 12% respectively.
The company achieved a 12.7% increase in the final dividend to shareholders, reflecting strong financial performance.
Mr Price Group Ltd (MRPLY) opened 184 new stores, contributing to a weighted average space growth of 4.3% and demonstrating expansion efforts.
The company reported a 9.9% increase in gross profit to ZAR16 billion, with a GP margin growth of 80 basis points.
The Apparel segment gained market share of 50 basis points, marking two consecutive years of market share gains.
The South African consumer environment remains uncertain with low GDP growth and potential VAT increases impacting consumer confidence.
The company faces challenges from higher taxes on competitors like Shein, which could affect market dynamics.
Despite positive sales growth, the consumer confidence remains negative, albeit trending in the right direction.
The company noted a constrained consumer environment in the first half of the financial year, impacting initial results.
Higher occupancy costs due to new space growth and electricity increases contributed to a 10% growth in expenses.
Q: Is there any sense around where Mr Price Group has gained market share and from whom? Also, how do you track market share outside of the RLC? A: It's challenging to pinpoint exactly where market share is gained from, but typically, it comes from those not reporting market share growth. Outside the RLC, we mainly track Sport and Studio 88, comparing them to Type D retailers in South Africa, where both are performing well, especially Studio 88. - Mark Blair, CEO
Q: Have the higher taxes on Shein materialized, and has Mr Price benefited from this? A: The higher taxes on Shein have led to social media outrage over increased prices, indicating the legislation is being applied. While it's still erratic, our e-commerce sales have grown slightly ahead of store sales, suggesting some positive impact. However, Shein's average customer income is above our target sector. - Mark Blair, CEO
Q: What is the outlook for cost growth in FY26, and are there any particular outliers to consider? A: We aim to manage costs within the medium-term target range of 27.5% to 28.5%. While lower input costs are expected, investments in technology and cybersecurity, as well as growth capabilities in our distribution centers, will be key focus areas. - Praneel Nundkumar, CFO
Q: Can you provide insight into the medium-term targets and how they are determined? A: Medium-term targets are based on a 24-month financial model. Where targets have been achieved, such as in the homeware sector, we have adjusted them upwards. These targets are continuously reviewed and adjusted based on data and forward business views. - Praneel Nundkumar, CFO
Q: What is the outlook on credit growth and the appetite for more growth in the current consumer environment? A: While the consumer environment remains uncertain, lower inflation and interest rates present opportunities. We aim to increase approval rates to around 25%, applying scorecards diligently to manage bad debt. Approval rates vary across brands, reflecting different customer segments. - Praneel Nundkumar, CFO
Q: How is Mr Price balancing higher CapEx with managing returns? A: Despite higher CapEx, particularly in supply chain and technology, we aim to maintain or reduce the cost per unit of merchandise. All investments undergo rigorous evaluation to ensure they meet return thresholds and contribute to top-line or margin enhancement. - Mark Blair, CEO
Q: What is the current state of stock and supply chain operations, especially regarding the Durban ports? A: The supply chain and port operations have improved significantly, allowing us to reduce lead time buffers. The stock is in good shape, with a manageable 10% increase. We maintain strong relationships with the port, ensuring efficient operations. - Mark Blair, CEO
Q: Are there acquisition opportunities in South Africa, or is Mr Price looking offshore due to local economic conditions? A: While the South African market presents challenges, we focus on smaller, tactical acquisitions with strong growth prospects. We receive numerous proposals but remain disciplined, saying no quickly when necessary. Our research phase will guide future opportunities. - Mark Blair, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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