Power cuts weigh on Mr Price’s half-year profit in South Africa

by MMC
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A shopper pushes a cart past a branch of a clothing store

A shopper pushes a shopping cart outside a branch of South African clothing and homewares retailer Mr Price, at Trade Route Mall, Lenasia, outside Johannesburg, South Africa, on 8 February 2023. REUTERS/Siphiwe Sibeko Acquire license rights

JOHANNESBURG, Nov 23 (Reuters) – South African budget fashion retailer Mr Price (MRPJ.J) announced a 9.3% drop in half-year profit on Thursday, hit by high levels of power outages and double-digit inflation in food and transport that hit its valued customers more severely.

It reported headline earnings per share, a measure of profit, of 449.9 cents for the 26 weeks ended Sept. 30, down from 496 cents a year earlier.

Retailers in South Africa have been hit by recurring power cuts, sometimes lasting up to 10 hours a day, which has reduced trading hours and increased the cost of running diesel generators.

Mr Price, who also sells homewares, said there were four times more breakdowns in the first quarter than in the same period the previous year.

It spent 140 million rand ($7.62 million) to ramp up its backup power solutions, which at the end of the first quarter fully covered its core business, compared to just 60% of its store base at the start of the quarter.

The group estimates a loss of 60,000 trading hours due to the power outages, which equates to around R190 million in revenue over the half-year.

Group turnover increased 26.4% to R16.8 billion, with retail sales growth of 27.8%, driven by the acquisition of the branded footwear and clothing company Studio 88.

Excluding Studio 88, retail sales increased 3.8% and same-store sales decreased 0.8% for the half.

($1 = R18.3689)

Reporting by Nqobile Dludla; Editing by Jacqueline Wong and Mrigank Dhaniwala

Our standards: The Thomson Reuters Trust Principles.

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