Mr Price Group (MRP) H2 2024 earnings summary

Executive summary

• Revenue grew 15.5% to R37.9bn for FY2024, with operating profit up 7.9% to R5.3bn and EBITDA up 13.5% to R8.2bn, 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 H2 performance.

• Cash conversion ratio improved to 86.9%, with R2.8bn 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.

• Diluted HEPS rose 6.3% to 1,252.6c, and dividend per share increased 6.7% to 810.3c, with a 63% payout ratio.

Financial highlights

• Retail sales grew 16.2% to R36.6bn, with total revenue at R37.9bn, up 15.5% year-over-year.

• Gross profit margin increased to 39.7% (up 20bps), with H2 margin at 40.6% (+160bps).

• Operating margin declined to 14.0% from 15.1%, impacted by S88 seasonality, but H2 improved to 16%.

• Cash flow from operations before working capital changes was R7.1bn; capex of R1.1bn fully funded from reserves.

• ROE at 23.3% and ROA at 11.7%, both slightly below prior year but within medium-term targets.

Outlook and guidance

• Subdued trading in April and May 2024 due to economic contraction and late winter, but June sales rebounded strongly, with Q1 FY2025 sales up 4.4% at improved gross margin.

• FY2025 capex forecast at R1.0bn, targeting up to 200 new stores and 5% space growth.

• 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 omni-channel strategy.