Mr Price Group Limited · JSE:MRP
Mr Price — H1 FY2012 Earnings Presentation
49 slides from Mr Price's earnings presentation, September 2011
Slide 1: Mr Price Group Limited Interim Results September 2011
Mr Price Group Limited Interim Results September 2011 Mr Price Group Limited Interim Results September 2011 0
Slide 2: Communication With Investment Community
Communication With Investment Community • Feedback questionnaire July 2011 Very or extremely – How informative do you find the results presentation 93% informative – Is information sufficient and relevant 100% Yes Mr Price Group Limited Interim Results September 2011 • New Group website launched – P
Slide 3: Benchmarking
Benchmarking • Finweek Top 200 Review – ranked 26th on JSE for return on equity (FY2010) • Sunday Times Top 100 Companies – ranked 7th on JSE for share Mr Price Group Limited Interim Results September 2011 price performance over the last 5 years and 10th over 10 years. Top placed clothing retailer •
Slide 4: Overview Of The Retail Environment
Overview Of The Retail Environment • Increase in retail sales in real terms for 20 consecutive months • September 2011 CPI% highest for the year at 5.7%, but remains within targeted range • Positive growth in GDP for 8 consecutive quarters but growth slowing Mr Price Group Limited Interim Results Se
Slide 5: Business And Consumer Confidence
Business And Consumer Confidence Consumer (remains net positive) – After a slight recovery in 2nd quarter 2011, consumer confidence fell 7 points to +4 – Decrease driven by decline in consumers expecting an improvement in the economy (fall in local and foreign markets, weaker economic growth in SA
Slide 6: SA Retail Sales Growth
SA Retail Sales Growth 25% Sales growth excl. June & July 14.3% 20% Mr Price Group Limited Interim Results September 2011 Sales growth for June 15% & July 4.5%, effect of SWC in base 10% % Growth 5% 0% Sales growth 13.5% Sales growth 15.3% -5% Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 2010
Slide 7: 2011 Group Highlights
2011 Group Highlights • Sales performance impacted by World Cup in the base • Flagship chain gained further market share • Improvement in GP% and good cost control Mr Price Group Limited Interim Results September 2011 • Profitability of all chains significantly up on comparable period • Significant
Slide 8: 2011 Group Highlights
2011 Group Highlights 2011 2010 Growth Retail sales R5.3 bn R4.8 bn 10.7 % Comparable sales R4.3 bn R4.0 bn 9.6 % Mr Price Group Limited Interim Results September 2011 RSP inflation 5.5 % Unit sales 84.6 m 80.3 m 5.4 % Stock turn (times) 6.9 6.5 Weighted average space growth (net) (1.6 % ) Number of
Slide 9: 2011 Group Income Statement
2011 Group Income Statement R’m 2011 2010 Growth Retail sales 5 282 4 772 11 % Cost of sales 3 099 2 806 10 % Mr Price Group Limited Interim Results September 2011 Gross profit - Rand 2 183 1 966 -% 41.3% 41.2% Other income 132 115 15 % Selling expenses 1 252 1 164 7% Administrative/other expenses 3
Slide 10: Operating Margin Analysis
Operating Margin Analysis Operating margin last year 11.3 % Gross profit: PMO (0.3 %) Markdowns 0.6 % Mr Price Group Limited Interim Results September 2011 Other (0.2 %) Store expenses: Payroll 0.2 % Occupancy 0.6 % Administrative and central costs 0.7 % Operating margin this year 12.9 % % of sales
Slide 11: Sales And Operating Profit Growth
Sales And Operating Profit Growth 1st half 1st half 2nd half 2012 2011 2011 26 weeks 26 weeks 26 weeks Mr Price Group Limited Interim Results September 2011 Sales Apparel 11.1 % 11.4 % 10.4 % Home 9.7 % 10.0 % 9.7 % Total 10.7% 11.0 % 10.2 % Operating profit Apparel 19.0 % 34.4 % 22.3 % Home 57.3 %
Slide 12: Sales And Operating Profit Growth
Sales And Operating Profit Growth 6 000 800 5 282 Mr Price Group Limited Interim Results September 2011 4 772 700 5 000 Operating profit (R’m) 4 300 679 600 Retail sales (R’m) 3 879 4 000 3 271 539 500 3 000 400 342 300 2 000 300 261 200 1 000 100 - - 2007 2008 2009 2010 2011 Retail sales Operating
Slide 13: Headline Earnings And Dividends Per Share
Headline Earnings And Dividends Per Share 2011 2010 Growth Basic earnings per share *1 186.6 c 150.8 c 23.7 % Headline earnings per share *1 187.3 c 153.3 c 22.2 % Mr Price Group Limited Interim Results September 2011 Dividend per share 93.6 c 76.7 c 22.0 % Dividend cover (times) *2 2.0 2.0 *1 Effec
Slide 14: Financial Position
Financial Position R’m 2011 2010 Non-current assets Property, plant and equipment 486 492 Mr Price Group Limited Interim Results September 2011 Intangible and other assets 160 154 Current assets Inventories 1 055 827 Trade and other receivables 1 056 903 Cash and cash equivalents 900 1 241 3 657 3 6
Slide 15: Capital Expenditure
Capital Expenditure Total: R138m Retail Divisional Split IT Reductions Sheet Mr Price Group Limited Interim Results September 2011 R24m 6% Street Revamps 13% 11% Mr Price New Stores Home 36% Mr Price 13% Retail 46% Property R55m Miladys R39m 11% Expansions and Mr Price Other relocations DC R8m Sport
Slide 16: Trade Receivables
Trade Receivables 2011 2010 Growth Number of active accounts 1 111 k 1 000 k 11.1 % Mr Price Group Limited Interim Results September 2011 Average credit limit R2 622 R2 442 7.4 % Average balance R859 R855 % able to purchase 91 % 89 % New application approval rate 41 % 42 % Credit sales R994 m R844 m
Slide 17: Trade Receivables
Trade Receivables 2011 2010 Growth Gross trade receivables R954 m R855 m 11.6 % Mr Price Group Limited Interim Results September 2011 Net bad debts as % of credit sales* 2.1 % 2.5 % Net bad debts as % of debtors* 4.1 % 4.7 % Impairment provision (% of debtors) 8.0 % 8.2 % * Excludes collection costs
Slide 18: Cash Flow – Significant Items
Cash Flow – Significant Items 800 723 600 Mr Price Group Limited Interim Results September 2011 400 R’m 200 102 - ↑36% (200) (138) (223) (211) (400) (264) (436) (600) Operating Working Net interest Tax Capex Purchase Dividends to profit capital received of shares by shareholders changes staff share
Slide 19: Divisional Performance
18 Divisional Performance Mr Price Group Limited Mr Price Group Limited Interim Results September 2011
Slide 20: Analysis Of Cotton Price
Analysis Of Cotton Price Generally commit Input margin pressure in second to orders four half of FY2012 but expect to months in advance maintain GP% in line with first half 9 250 Mr Price Group Limited Interim Results September 2011 Cotton price (USD cents /lb) 200 Oil price (USD /barrel) Exchange r
Slide 21: Segmental Performance – Apparel
Segmental Performance – Apparel 2011 2010 Growth Retail sales R3.8 bn R3.4 bn 11.1 % Mr Price Group Limited Interim Results September 2011 Comparable sales R3.0 bn R2.8 bn 8.8 % Unit sales 59.9 m 56.5 m 6.1 % RSP inflation 5.1 % Weighted average space growth 0.0 % Number of stores 580 578 Trading de
Slide 22: Mr Price
Mr Price 2011 2010 Growth Retail sales R3.0 bn R2.7 bn 11.1 % Mr Price Group Limited Interim Results September 2011 Comparable sales R2.3 bn R2.1 bn 8.8 % Unit sales 52.5 m 49.5 m 6.2 % RSP inflation 5.1 % Weighted average space growth 2.6 % Number of stores 344 339 Trading density R29 755 m-2 R27 0
Slide 23: Highlights
Highlights Sep 2011 Mar 2011 Sep 2010 Contribution RLC market share to RLC sales Clothing 86.1% 13.5% 13.4% 13.2% Mr Price Group Limited Interim Results September 2011 Footwear 13.9% 8.7% 8.5% 8.1% Total 100.0% 12.5% 12.4% 12.1% • Per AMPS - number of shoppers increased by 283 000 (7%) to 4.6 millio
Slide 24: Mr Price Group Limited Interim Results September 2011
23 Mr Price Group Limited Interim Results September 2011
Slide 25: Mr Price Group Limited Interim Results September 2011
24 Mr Price Group Limited Interim Results September 2011
Slide 26: Mr Price Sport
Mr Price Sport 2011 2010 Growth Retail sales R294 m R244 m 20.5 % Mr Price Group Limited Interim Results September 2011 Comparable sales R247 m R229 m 7.6 % Unit sales 3.9 m 3.3 m 17.6 % RSP inflation 2.5 % Weighted average space growth 1.5 % Number of stores 44 36 Trading density R13 553 m-2 R11 12
Slide 27: Highlights
Highlights Sep 2011 Sep 2010 Contribution Contribution Sales Sales to sales to sales Equipment and accessories R87m 29.7% R70m 28.5% Mr Price Group Limited Interim Results September 2011 Footwear R43m 14.7% R38m 15.4% Apparel R164m 55.6% R136m 56.1% Total R294m 100.0% R244m 100.0% • Per AMPS, 6% inc
Slide 28: Mr Price Group Limited Interim Results September 2011
27 Mr Price Group Limited Interim Results September 2011
Slide 29: Mr Price Group Limited Interim Results September 2011
28 Mr Price Group Limited Interim Results September 2011
Slide 30: Miladys
Miladys 2011 2010 Growth Retail sales R515 m R484 m 6.4 % Mr Price Group Limited Interim Results September 2011 Comparable sales R495 m R452 m 9.4 % Unit sales 3.5 m 3.7 m (5.3 % ) RSP inflation 12.0 % Weighted average space growth (8.5 % ) Number of stores 192 203 Trading density R16 269 m-2 R14 43
Slide 31: Highlights
Highlights Sep 2011 Mar 2011 Sep 2010 Contribution RLC market share to RLC sales Outerwear 67.3% 4.7% 4.8% 5.2% Mr Price Group Limited Interim Results September 2011 Intimatewear 10.3% 2.9% 2.9% 2.8% Footwear 12.1% 2.9% 3.1% 3.2% Accessories 8.4% 8.4% 8.8% 9.5% Cosmetics 1.9% 0.5% 0.4% 0.3% Total 10
Slide 32: Segmental Performance - Home
Segmental Performance - Home 2011 2010 Growth Retail sales R1.5 bn R1.4 bn 9.7 % Mr Price Group Limited Interim Results September 2011 Comparable sales R1.3 bn R1.2 bn 11.5 % Unit sales 24.7 m 23.8 m 3.7 % RSP inflation 6.6 % Weighted average space growth (4.2 % ) Number of stores 364 365 Trading de
Slide 33: Mr Price Home
Mr Price Home 2011 2010 Growth Retail sales R1 022 m R948 m 7.8 % Mr Price Group Limited Interim Results September 2011 Comparable sales R902 m R821 m 9.8 % Unit sales 17.0 m 16.7 m 1.7 % RSP inflation 7.1 % Weighted average space growth (4.0 % ) Number of stores 133 131 Trading density R15 882 m-2
Slide 34: Highlights
Highlights Sep 2011 Mar 2011 Sep 2010 Contribution RLC market share to RLC sales Domestic textiles 56.2% 27.0% 27.3% 27.0% Mr Price Group Limited Interim Results September 2011 Household utensils 12.5% 19.9% 20.2% 20.3% Accessories and décor 31.3% 12.4% 12.6% 13.3% Total 100.0% 19.0% 19.3% 19.7% • P
Slide 35: Mr Price Group Limited Interim Results September 2011
34 Mr Price Group Limited Interim Results September 2011
Slide 36: Mr Price Group Limited Interim Results September 2011
35 Mr Price Group Limited Interim Results September 2011
Slide 37: Sheet Street
Sheet Street 2011 2010 Growth Retail sales R469 m R411 m 14.0 % Mr Price Group Limited Interim Results September 2011 Comparable sales R446 m R388 m 14.9 % Unit sales 7.8 m 7.2 m 8.4 % RSP inflation 5.2 % Weighted average space growth (5.0 % ) Number of stores 231 234 Trading density R21 210 m-2 R17
Slide 38: Highlights
Highlights Sep 2011 Mar 2011 Sep 2010 Contribution RLC market share to RLC sales Domestic textiles 83.4% 21.2% 21.0% 20.5% Mr Price Group Limited Interim Results September 2011 Accessories and décor 16.6% 3.4% 3.3% 3.2% Total 100.0% 9.9% 9.8% 9.7% • Per AMPS, a 14% increase in total shoppers achieve
Slide 39: Mr Price International
Mr Price International • African footprint now 67 stores: 43 owned and 24 franchise Mr Price Group Limited Interim Results September 2011 Sheet Street 9 Mr Price Mr Price Home 21 5 Miladys Mr Price 7 Sport 1 • Have been successfully operating outside South Africa for 13 years • Strategic focus is on
Slide 40: The Growth Strategy
The Growth Strategy BUSINESS Our aim is to be a top performing international retailer… MODEL 420 64 Mr Price Group Limited Interim Results September 2011 360 25 Year CAGR SOUTH AFRICA 48 HEPS and DPS (cents) 300 Share Price (Rand) Share price 26.2% 240 DPS 25.3% 32 180 HEPS 23.5% INTERNATIONAL
Slide 41: The Growth Strategy
The Growth Strategy • Focused on remaining a cash retailer, with a strong balance BUSINESS MODEL sheet • Credit sales not to exceed 25% in the longer term Mr Price Group Limited Interim Results September 2011 • Focus on fashion/value product offer SOUTH AFRICA • Growth to be driven by existing busin
Slide 42: The Growth Strategy
The Growth Strategy Market share BUSINESS MODEL • All chains have opportunities to accelerate growth in categories where they are under-penetrated Mr Price Group Limited Interim Results September 2011 • Market share gains to be driven by store growth and an online SOUTH AFRICA capability Space • Ope
Slide 43: The Growth Strategy
The Growth Strategy Profitability BUSINESS MODEL • Mr Price Apparel has high growth potential by gaining market share and expanding its footprint locally and internationally Mr Price Group Limited Interim Results September 2011 • Although remaining 4 divisions performances are trending well, SOUTH A
Slide 44: The Growth Strategy
The Growth Strategy • Focus on corporate owned stores BUSINESS MODEL • Nigeria will provide a good test of operating away from home base Mr Price Group Limited Interim Results September 2011 • Identifying market opportunities big enough to make a SOUTH AFRICA significant impact on growth • Identifyi
Slide 45: The Growth Strategy
The Growth Strategy • Digesting the findings of the recently completed supply chain BUSINESS MODEL study by international consultants • Appointed an internationally experienced director to create a Mr Price Group Limited Interim Results September 2011 best in class supply chain and sourcing model SO
Slide 46: The Growth Strategy
The Growth Strategy • Significant investment has been made in training across all BUSINESS MODEL levels • Developing talent pool in key areas to support business growth Mr Price Group Limited Interim Results September 2011 • Balance between home grown talent and external recruitment SOUTH AFRICA • E
Slide 47: Migration Through The LSM's
Migration Through The LSM’s LSM’s targeted by Mr Price Group Customers per LSM (AMPS July 2011) 7 000 Mr Price Group Limited Interim Results September 2011 14.0% 8.3% 6 000 11.0% No. of adults (000) 5 000 16.6% 4 000 22.4% 3 000 12.9% 2 000 14.8% 1 000 LSM 4 LSM 8 - LSM 5 LSM 9 LSM 1 LSM 2 L
Slide 48: Prospects
Prospects • Plan to open 5 franchise stores, 22 owned stores and close 9 in the second half • Rise in living standards for most South Africans will Mr Price Group Limited Interim Results September 2011 continue to benefit industries catering to consumers • Indicators that the economy is slowing does
Slide 49: Thank You
48 Thank You Mr Price Group Limited Interim Results September 2011