Mr Price Group Limited · JSE:MRP
Mr Price — H1 2011 Earnings Presentation
36 slides from Mr Price's earnings presentation, September 2010
Slide 1: Mr Price Group Limited Interim Results - September 2010
Mr Price Group Limited Interim Results - September 2010 0
Slide 2: Sharks 30 – WP 10
Sharks 30 – WP 10 1
Slide 3: Analyst questionnaire – August 2010
Mr Price Group Limited Analyst questionnaire – August 2010 Results distributed to analysts in November Rating Presentation by core team * 88% Q&A after formal presentation * 84% Results pack and presentation CD * 88% Networking after the results * 72% Level of disclosure - Results presentation * 88%
Slide 4: Overview of retail environment
Mr Price Group Limited Overview of retail environment Increase in retail sales in real terms for 8 consecutive months + Extended school holidays as a result of the FIFA World Cup - impact on Mr Price Group not significant + Household debt to disposable income remains at high levels - Lowest
Slide 5: Consumer confidence and SA retail sales growth
Mr Price Group Limited Consumer confidence and SA retail sales growth 25 22 10 PERIOD OF NEGATIVE GDP GROWTH 7.6 20 18 8 Consumer confidence index SA retail sales growth (%) 15 15 6 15 12 2.1 2.2 4 1.0 14 4.6 10 (points) 0.1 6 2 4 2.7 5 (2.0) - 0.6 1 1 (2) - (2.0) (4) (1) (2.9) (5) (6) (4) (4.5) (10
Slide 6: CPI and Rand/USD exchange rate
Mr Price Group Limited CPI and Rand/USD exchange rate 16 12 13.5 14 9.62 12.3 9.29 10 12 Exchange rate (R/USD) 8.12 7.74 7.61 7.37 7.37 7.32 6.94 8 10 6.77 8.33 6.44 10.5 7.85 10.3 CPI (%) 8 9.1 6 8.5 7.5 6 6.9 6.1 6.3 4 TARGET INFLATION RANGE 5.1 4 4.2 3.2 2 2 - - Sep-07 Mar-08 Sep-08 Mar-09 Sep-09
Slide 7: 2010 Group highlights
Mr Price Group Limited 2010 Group highlights Improved profitability by the chains which were underperforming Expenditure well controlled Improvement in operating margins across all divisions Strong performance of debtors book Continued improvement in stock turn, aided by Project Redgold
Slide 8: 2010 Group highlights
Mr Price Group Limited 2010 Group highlights 2010 2009 Growth Retail sales R 4.8 bn R 4.3 bn 11.0 % Comparable sales − Including expanded and relocated stores in like-for-like locations 8.4 % − Excluding the above 7.5 % (basis disclosed in remainder of presentation) RSP inflation 1.4 % Units sold 80
Slide 9: 2010 Group income statement
Mr Price Group Limited 2010 Group income statement R’m 2010 2009 Growth Retail sales 4 772 4 300 11.0% Cost of sales 2 806 2 619 7.2% Gross profit - Rand 1 966 1 681 16.9% -% 41.2% 39.1% Other income 115 102 12.6% Selling expenses 1 164 1 105 5.4% Administrative/other expenses 378 336 12.2% Profit f
Slide 10: Sales and operating profit
Mr Price Group Limited Sales and operating profit % Growth 1st half 2nd half 1st half 2010 2010 2011 Sales Apparel 15.4% 11.2% 11.4% Home 0.9% 5.3% 10.0% Total 10.8 % 9.4% 11.0% Operating Profit Apparel 19.1% 17.8% 34.4% Home (80.8%) 60.3% 1785.7% Total 14.0% 23.2% 57.4% Recovery of underperformin
Slide 11: Earnings and dividends per share
Mr Price Group Limited Earnings and dividends per share 2010 2009 Growth Basic earnings per share *1 150.8c 100.5c 50% Headline earnings per share 153.3c 101.5c 51% Core headline earnings per share *2 153.3c 93.8c 63% Dividend per share 76.7c 46.2c 66% Dividend cover (times) *3 2.0 2.2 *1 Impacted b
Slide 12: Sales and operating profit growth
Mr Price Group Limited Sales and operating profit growth 6 000 600 539 4 772 4 300 Operating profit (R’m) 4 000 3 879 400 Retail sales (R’m) 342 3 271 300 2 679 261 209 2 000 200 - - 2006 2007 2008 2009 2010 5 Year CAGR – Retail sales: 17% Operating profit: 26% Interim Results September 2010 11
Slide 13: Core headline earnings and dividends per share
Mr Price Group Limited Core headline earnings and dividends per share 160 153.3 120 Cents per share 93.8 80.3 76.7 80 74.6 61.9 46.2 36.5 40.2 40 30.4 - 2006 2007 2008 2009 2010 5 Year CAGR 10 Year CAGR Core HEPS 28% 28% Dividends per share 26% 38% Interim Results September 2010 12
Slide 14: 2010 Highlights Financial position
Mr Price Group Limited 2010 Highlights Financial position R’m 2010 2009 Non-current assets Long-term receivables and prepayments - 240 Property, plant and equipment 492 559 Intangible and other assets 154 79 Current assets Inventories 827 968 Trade and other receivables 903 771 Cash and cash equival
Slide 15: Project Redgold
Mr Price Group Limited 2010 Highlights Project Redgold STOCK TURN 5.3 5.2 5.4 5.8 6.5 2006 2007 2008 2009 2010 Inventory at 2007 levels despite a sales increase of 46% over the period Interim Results September 2010 14
Slide 16: Trade receivables
Mr Price Group Limited Trade receivables 2010 2009 Growth Gross trade receivables R 855m R 742m 15% Net bad debts as % credit sales * 2.5% 3.8% Net bad debts as % debtors * 4.7% 7.4% Impairment provision (% of debtors) 8.2% 8.6% Markov chain analysis 5.4% 5.3% Additional risk factors 2.8% 3.3% * Exc
Slide 17: Trade receivables
Mr Price Group Limited Trade receivables 2010 2009 Growth Number of active accounts 1 000 k 871 k 15 % Average credit limit R 2 274 R 2 367 Average balance R 855 R 851 % able to purchase 89 % 87 % New application approval rate 42 % 36 % Debt relief applications 2010 2009 Number Value Number Value Re
Slide 18: Cash flow – significant items
Mr Price Group Limited Cash flow – significant items 700 581 600 500 400 300 177 R’million 200 107 100 - (100) (66) (200) (194) (184) (300) (400) (320) Operating Working Net interest Taxes paid Capex Purchase of Dividend to profit capital received shares by shareholders changes staff share trusts Ca
Slide 19: Capital expenditure
Mr Price Group Limited Capital expenditure R66m Split of retail capex F2010 70 Other - R5m Reductions 60 3% DC - R7m New stores 50 21% IT - R17m R’million 40 30 Expansions and Revamps 20 Retail 76% R37m 10 - 2010 Projected capex spend for FY2011 – R195m Interim Results September 2010 18
Slide 20: Divisional Performance
Divisional Performance 19
Slide 21: Segmental performance - Apparel
Mr Price Group Limited Segmental performance - Apparel 2010 2009 Growth Retail sales R 3.4 bn R3.1 bn 11.4 % Comparable sales 6.5 % Unit sales 56.5 m 51.1 m 10.6 % Weighted average space growth 4.6 % RSP inflation 0.8 % Trading density R 21 998m-2 R 20 685 m-2 6.3 % Operating profit R 517.5 m R 385.
Slide 22: Mr Price
Mr Price Group Limited Mr Price 2010 2009 Growth Retail sales R 2.7 bn R2.4 bn 12.0 % Comparable sales 7.7 % Unit sales 49.5 m 44.4 m 11.5 % Weighted average space growth 6.1 % RSP inflation 0.6 % Trading density R27 071m-2 R 25 414m-2 6.5 % Number of stores 339 328 Interim Results September 2010 21
Slide 23: Highlights
Mr Price Group Limited Highlights Per AMPS survey performed in July 2010, increase of 16% in number of shoppers, with increase in AMPS universe of 8% The AMPS survey also noted: – 30% growth in number of shoppers aged 15-24 – 15% increase in black shoppers (2009: 39%) – notable increase in Colou
Slide 24: Mr Price Sport
Mr Price Group Limited Mr Price Sport 2010 2009 Growth Retail sales R 244 m R 194 m 25.9 % Comparable sales 7.1 % Unit sales 3.3 m 2.6 m 26.5 % Weighted average space growth 8.3 % RSP inflation (0.5 %) Trading density R 11 121m-2 R 9 781m-2 13.7 % Number of stores 36 32 Interim Results September 201
Slide 25: Highlights
Mr Price Group Limited Highlights Action taken in previous year continues to yield results Gross margin percentage improved through lower markdowns Strategic reduction in trading space proving successful Division exceeded internal profitability targets Per Bateleur Khanya research: – ranks
Slide 26: Miladys
Mr Price Group Limited Miladys 2010 2009 Growth Retail sales R 484 m R 472 m 2.5 % Comparable sales 1.1 % Unit sales 3.7 m 4.1 m (9.4 %) Weighted average space growth (1.6 %) RSP inflation 13.1 % Trading density R 14 434m-2 R 14 209m-2 1.6 % Number of stores 203 216 Interim Results September 2010 25
Slide 27: Highlights
Mr Price Group Limited Highlights Performance negatively affected by – change in buying methodology – poor deliveries from suppliers Despite the factors detailed above and low sales growth, division achieved a significant increase in operating profit due to – lower markdowns – tight expense cont
Slide 28: Segmental performance - Home
Mr Price Group Limited Segmental performance - Home 2010 2009 Growth Retail sales R 1.4 bn R 1.2 bn 10.0 % Comparable sales 9.9 % Unit sales 23.8 m 22.2 m 7.6 % Weighted average space growth (1.0 %) RSP inflation 2.5 % Trading density R 14 644 m-2 R 13 365 m-2 9.6 % Operating profit R 83.0 m R 4.4 m
Slide 29: Mr Price Home
Mr Price Group Limited Mr Price Home 2010 2009 Growth Retail sales R 948 m R 850 m 11.5 % Comparable sales 11.3 % Unit sales 16.7 m 14.9 m 12.0 % Weighted average space growth (0.9 %) RSP inflation (0.2 %) Trading density R 13 694m-2 R 12 355m-2 10.8 % Number of stores 131 136 Interim Results Septem
Slide 30: Highlights
Mr Price Group Limited Highlights Initiatives introduced last year have significantly improved trading performance Market share growth per RLC driven by domestic textiles Per Bateleur Khanya research: Mr Price Home remains the most loved and most frequented homewares retailer Per AMPS: – inc
Slide 31: Sheet Street
Mr Price Group Limited Sheet Street 2010 2009 Growth Retail sales R 411 m R 385 m 6.7 % Comparable sales 7.2 % Unit sales 7.2 m 7.3 m (1.4 %) Weighted average space growth (1.2 %) RSP inflation 8.6 % Trading density R 17 357m-2 R 16 304m-2 6.5 % Number of stores 234 239 Interim Results September 201
Slide 32: Highlights
Mr Price Group Limited Highlights Significant increase in operating margin achieved by higher GP% (improved resourcing and markdowns) and tight expense control (5% growth vs. 7% sales growth) Per RLC market share in main category (domestic textiles) over past year has increased by more than 1%
Slide 33: Mr Price International
Mr Price Group Limited Mr Price International Post 2000 compound GDP growth in Africa has been 4.9% and wholesale/retail sector 6.8% Africa has 52 cities with population exceeding 1 million and by 2040 the labour force will exceed China’s Have extensive experience in Southern Africa with 42 ow
Slide 34: Economic outlook
Mr Price Group Limited Economic outlook Number of leading indicators suggest that economy is slowly recovering + Credit demand positive since May 2010, however recovery expected to be subdued + Although consumers are more confident, growth in spending post World Cup is slowing - CPI expected
Slide 35: Prospects
Mr Price Group Limited Prospects Although the trading environment is expected to remain challenging, consumer confidence is improving and we will capitalise on this Focus on cash with a tightly managed credit facility has been successful in good and bad trading conditions Improvement in intern
Slide 36: Thank You
Thank You