Mr Price Group (MRP) H2 2024 earnings summary

Executive summary

• Revenue grew 15.5% to ZAR 37.9 billion for FY2024, with operating profit up 7.9% to ZAR 5.3 billion and EBITDA up 13.5% to ZAR 8.2 billion, driven by market share gains and improved gross profit margins.

• Market share increased for seven consecutive months, rising to 16.6% from 15.1% year-over-year, with strong performance in apparel and telecom segments.

• Cash conversion ratio improved to 86.9%, with ZAR 2.8 billion cash on hand and no long-term debt (excluding S88).

• Strategic focus on profitable market share, disciplined capital allocation, and operational excellence, with ongoing integration of recent acquisitions and internal growth initiatives.

• Diluted HEPS rose 6.3% to 1,252.6c, and dividend per share increased 6.7% to 810.3c.

Financial highlights

• Retail sales grew 16.2% to ZAR 36.5 billion, with total revenue at ZAR 37.9 billion, up 15.5% year-over-year.

• Gross profit increased 16.8% to ZAR 14.6 billion, with group gross profit margin at 39.7%, up 20 basis points; H2 margin at 40.6% (+160bps).

• Operating profit reached a record ZAR 5.3 billion, up 7.9%; EBITDA grew 13.5% to ZAR 8.2 billion.

• HEPS rose 6.7% for the year and 17.8% in H2; final dividend up 17.8%.

• Cash flow from operations before working capital changes was ZAR 7.1 billion; capex of ZAR 1.1 billion fully funded from reserves.

Outlook and guidance

• April and May 2024 saw subdued trade due to economic contraction and late winter, but June sales rebounded strongly, with double-digit growth and continued market share gains.

• Forecast capex of ZAR 1 billion for FY2025, including up to 200 new stores (~5% space growth), with a focus on quality returns.

• Expecting further improvement in H2 2025, supported by moderating inflation, potential interest rate cuts, and increased consumer liquidity.

• Focus on inventory management, clean exit from winter, and leveraging moderating inflation and potential interest rate cuts.

• Medium-term targets set for group gross profit margin (40%-42%) and operating margin (13%-15%), with ongoing review.