Friday, June 1, 2018

Mr Price cuts final dividend by 6% despite double-digit profit growth

Based on policy and payout ratio decision, Mr Price cut its final dividend by 6%. After generously raising its interim dividend by 22%, retail group says.

The retailer said its decision to cut its final dividend was based on its policy of holding its payout ratio at 63% of headline earnings per share (HEPS). In its 2017 financial year, its payout ratio had widened to 73%.

Mr Price’s diluted HEPS grew 21% to R10.75 from R8.88, its results for the year to end-March showed on Friday morning.

The group’s overall revenue grew 8% to R21.3bn and its net profit grew 23% to R2.8bn.
The owner of the Mr Price clothing chain, along with other brands including Miladys and Sheet Street, declared a final dividend of 414.1c, down from 438.8c for the second half of its 2017 financial year.

But combined with the 279c interim dividend it paid in the first half of its 2018 financial year, versus 228.2c in the matching period in 2017, its total for its 2018 financial year came to 693.1c, a 26c increase on the prior financial year’s 667c.
Mr Price segments itself into four divisions: apparel, which contributed 71% of retail sales and 73% of operating profit; home, which contributed 24% of sales and 21% of profit; financial services and cellular, which contributed 5% of sales and 11% of profit; and central services, which reduced operating profit by R191m, a 23% increase from the R155m that it cost in the 2017 financial year.
Central services includes information technology costs, and Mr Price said its online sales grew 11.5%.

"Local store sales were up 8.3% while non-South African store sales increased by 3.8%," Mr Price CEO Stuart Bird said in the results statement.
"Retail selling price inflation was 1.7% and 220-million units were sold, an increase of 6.4%.
"Net trading space increased by 2.1% and after opening 57 new stores, the group traded from 1,258 corporate owned stores at year-end."

The group recently acquired 12 Kenyan franchise stores from Deacons East Africa.
Bird said the group’s envisaged capital expenditure in its 2019 financial year was R550m, funded by cash reserves.

This will include the opening of about 48 stores in addition to the 12 Kenyan franchise stores.


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