Slide 1: Annual results March 2012
Mr Price Group Annual results MarCH 2012 JSE share code: MPC
Slide 2: 2012 group highlights
2012 group highlights Retail sales Operating Profit Operating margin R11.8bn R1.7bn 14.8% 10.2% 21.8% 1.4% 12.9% 26.5% Headline earnings per share Dividends per share Return on equity 503.0c 314.0c 47.2% 20.1% 24.6% 1.2% 24.7% Note : Growth on the reported 2011 53 trading week base : Growth
Slide 3: It's not all about the numbers
It's not all about the numbers • Successful international roadshow Nov 2011. Offshore shareholding now at 36% • Included in MSCI emerging markets index from May 2012 • Independent internal audit quality review - MPC maintained highest rating possible, only company in RSA. Part of elite group globall
Slide 4: Overview of the retail environment
OVERVIEW OF THE RETAIL ENVIRONMENT • Consumer confidence levels still net positive at +5 index points – Financial position of households over next 12 months high at +16 – Expect improvement in economy over next 12 months, however – Not appropriate time to buy durable goods • Business confidence jump
Slide 5: Retail sales growth
RETAIL SALES GROWTH • Growth in total retail sales in RSA for 6 months to 31 Mar has been favourably impacted by the performance of general dealers and retailers of food and beverages (double digit growth) • Retailers of textiles, clothing, footwear and leather goods had a positive quarter to 31 Dec
Slide 6: Group performance
Group performance 2012 2011* Growth Retail sales R11.7 bn R10.3 bn 12.9 % Comparable sales - year 10.3 % * - 1st half 9.5 % - 2nd half 11.0 % * Unit sales 193 m 179 m 7.6 % RSP inflation 5.0 % Weighted average space growth 0.0 % Trading density R22 979 m-2 R20 350 m-2 12.9 % Operating margin 14.8 %
Slide 7: Sales analysis 2012
Sales analysis 2012 20% • Market share gains in 2nd 18% half in 3 of 4 chains Total 16% sales included in RLC, growth maintained in other 14% 5.0% 12.6% • Higher credit demand 12% 11.5% • 69m sales transactions Growth 10% 5.0% and 193m units sold 3.0% • Increased basket size: 8% 5.6% Cash R186 +7.2%
Slide 8: 2012 group income statement
2012 group income statement % to % to R’m 2012 sales 2011 sales Growth Retail sales 11 767 10 673 10.2 % Cost of sales 6 843 6 202 10.3 % Gross profit 4 924 41.8% 4 471 41.9% 10.1 % Other income 296 240 23.3 % Selling expenses 2 645 22.5% 2 505 23.5% 5.6 % Administrative expenses 833 7.1% 777 7.3% 7
Slide 9: Sales and operating profit growth
Sales and operating profit growth 1st half 2nd half Full year 26 weeks 26 weeks 52 weeks Sales Apparel 11.1 % 15.4% 13.4% Home 9.7 % 11.2% 10.5% Total 10.7 % 14.2% 12.6% Operating profit Apparel 21.1 % 22.1% 21.7% Home 57.3 % 40.0% 45.6% Total 27.4 % 25.9% 26.5% Mr Price Group Limited ANNUAL RESULTS
Slide 10: Operating margin improvement
Operating MARGIN IMPROVEMENT Gross profit Store expenses 0.3% 0.2% 15% 0.5% 0.2% 0.3% 14% 0.2% 13% (0.2%) (0.1%) 14.8% 12% 13.4% 11% 10% Operating PMO Markdowns Other Other Payroll Occupancy Other Admin and Operating margin income central margin 2011 costs 2012 % of sales 2012 2011 Depreciation 1.4%
Slide 11: Earnings per share
Earnings per share 2012 2011 Growth 53 weeks Basic earnings per share 500.9 c 412.3 c 21.5 % Headline earnings per share 503.0 c 418.9 c 20.1 % 52 weeks Basic earnings per share 500.9 c 396.7 26.3 % Headline earnings per share 503.0 c 403.3 24.7 % • Fully diluted HEPS 464.5c • Voluntary trading upda
Slide 12: Dividends per share
Dividends per share Final dividend 220.4c +26% Annual dividend 314.0c +25% • Dividend cover retained at 1.6 times (payout ratio 62.5%) • In the past 26 years dividends per share have never decreased • Secondary tax on companies replaced by dividends tax, there will no longer be an income statement c
Slide 13: Performance record
PERFORMANCE RECORD 550 500 450 400 Cents per share 350 300 250 200 150 100 50 -0 2012 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 HEPS DPS CAGR 5 year 10 year 26 year HEPS 21.3% 23.8% 23.4% DPS 25.5% 33.1% 25.3% Mr Price Group Limited ANNUAL RESULTS MARCH 2012 13
Slide 14: Drivers of MPC earnings growth
Increase in returns 10 years DRIVERS OF MPC EARNINGS GROWTH Change in Rand growth % of sales Retail sales R9 041 m Cost and expenses R7 502 m 7.6 % Cost of sales R4 944 m 6.1 % Operating margin Selling expenses R1 919 m 2.1 % Administrative expenses R639 m (0.6 %) has increased from Profit from oper
Slide 15: Financial position
Financial position R’m 2012 2011 Non-current assets Property, plant and equipment 539 460 Intangible and other assets 204 148 Current assets Inventories 1 168 954 Trade and other receivables 1 183 931 Cash and cash equivalents 1 201 1 368 4 295 3 861 Equity attributable to shareholders 2 780 2 394 N
Slide 16: Financial position
Financial position Intangible assets (R’m) 37.8% • E-commerce system 2011 148 • E-learning training modules 2012 204 • IT software licenses Inventories 22.5% • Inventory growth in Home chains lower than sales growth 2011 954 • Growth mainly off a low base in Mr Price Apparel 2012 1 168 • Stockin
Slide 17: Trade receivables
Trade receivables Split of credit types in RSA • Retailers only constitute 3.3% of total consumer credit in RSA Unsecured credit • Gross debtors book up 9% y/y - Mortgages 9% Credit facilities mortgages 4.0%, secured 12.8%, 11% unsecured 53.1% Source: National Credit Regulator 19% Secured 61% Credit
Slide 18: Trade receivables
Trade receivables 2012 2011 Growth Gross trade receivables R1 208 m R820 m 47.3 % Number of active accounts 1 187 k 1 034 k 14.7 % Credit sales R2.2 bn R1.7 bn 26.2 % Credit sales contribution 18.6 % 16.2 % 3 000 73% of book 2 500 2 000 2 353 Rand 1 500 2 603 29% 2 594 2 401 1 824 2 222 1 000 500
Slide 19: Trade receivables
Trade receivables • 3rd Q credit growth higher than expected at 41.4% - scorecard subsequently tightened • Long-term target is a cash sale ratio of at least 75% 600 Credit 15.9% Growth in sales (R’m) sales 500 Total growth sales 400 growth 10.1% 11.9% 12.6% 300 200 100 17.5% 23.5% 41.4% 27.5% -0 Apr
Slide 20: Capital expenditure
Capital expenditure Total Retail Divisional Split Other Reductions Sheet Street DC New stores Retail 5% Revamps 5% 5% Mr Price 8% 23% Mr Price Property Home 20% 13% 27% R301m R168m R168m 56% Miladys 5% 56% 18% 13% Mr Price IT 45% Sport Expansions and Relocations • Capital expenditure for FY 2013 is
Slide 21: Divisional performance
DIVISIONAL PERFORMANCE
Slide 22: Segmental performance Apparel
Segmental performance Apparel All segmental and divisional information is based on 52 weeks for both periods, or 26 weeks for the 2nd half 2012 2011 Growth Retail sales R8.4 bn R7.4 bn 13.9 % Comparable sales - year 10.6 % - 1st half 8.6 % - 2nd half 12.4 % Unit sales 137m 126 m 8.9 % RSP inflation
Slide 23: Mr Price
Mr price 2012 2011 Growth Retail sales R6.5 bn R5.8 bn 13.2 % Comparable sales - year 9.8 % - 1st half 8.9 % - 2nd half 10.6 % Unit sales 8.3 % RSP inflation 4.5 % Weighted average space growth 3.8 % Trading density R30 614 m-2 R28 094 m-2 9.0 % Stock turn (times) 7.0 7.3 Number of stores 353 340 Mr
Slide 24: Mr Price highlights
Mr price highlights RLC market share (%) Contribution to sales Footwear Footwear 8.5% 15% 9.0% Clothing R6.5bn 13.4% 13.7% 85% Clothing • 2011 • 2012 • Nielson’s brand health study: – remains the most loved brand in the category – enjoys the highest store usage amongst its competitor set • Growth in
Slide 25: Mr Price Sport
Mr price sport 2012 2011 Growth Retail sales R686 m R542 m 26.5 % Comparable sales - year 11.7 % - 1st half 7.3 % - 2nd half 15.5 % Unit sales 20.3 % RSP inflation 5.0 % Weighted average space growth 3.5 % Trading density R14 963 m-2 R12 241 m-2 22.2 % Stock turn (times) 4.8 5.2 Number of stores 47
Slide 26: Mr Price Sport highlights
Mr price sport highlights • Market research shows established Contribution to sales acceptance of homegrown brands Equipment and (Maxed, Trail and Promaster) accessories Apparel • Successful introduction of high-end 34% technical products while still offering great value (Maxed Elite, Trail Tech) R6
Slide 27: Miladys
Miladys 2012 2011 Growth Retail sales R1.1 bn R1.0 bn 11.2 % Comparable sales - year 14.0 % - 1st half 8.1 % - 2nd half 19.2 % Unit sales 5.9 % RSP inflation 6.2 % Weighted average space growth (8.1 % ) Trading density R17 950 m-2 R14 834 m-2 21.0 % Stock turn (times) 5.9 6.5 Number of stores 188 19
Slide 28: Miladys highlights
Miladys highlights RLC market share (%) Contribution to sales Accessories Accessories 8.7% 8.2% 8% Footwear Footwear 12% 3.2% 2.8% Intimatewear Intimatewear 10% R1.1bn 2.9% 2.9% 68% Outerwear 4.8% 4.9% Outerwear • 2011 • 2012 • Landscape research - increase in usage of 16% (19% increase in black cus
Slide 29: Segmental performance Home
Segmental performance home 2012 2011 Growth Retail sales R3.3 bn R3.0 bn 10.6 % Comparable sales - year 9.5 % - 1st half 11.5 % - 2nd half 8.0 % Unit sales 4.6 % RSP inflation 5.9 % Weighted average space growth (2.0 %) Trading density R17 888 m-2 R15 847 m-2 12.9 % Operating margin 11.2 % 8.5 % Num
Slide 30: Mr Price Home
Mr price home 2012 2011 Growth Retail sales R2.3 bn R2.1 bn 9.9 % Comparable sales - year 8.4 % - 1st half 9.8 % - 2nd half 7.2 % Unit sales 4.6 % RSP inflation 5.2 % Weighted average space growth (1.5 %) Trading density R16 426 m-2 R14 729 m-2 11.5 % Stock turn (times) 6.1 5.9 Number of stores 140
Slide 31: Mr Price Home highlights
Mr price home highlights RLC market share (%) Contribution to sales Accessories and decor 12.6% Accessories 12.3% and decor 32% Household utensils 20.2% 19.6% R2.3bn 55% Domestic textiles 27.3% 13% Domestic 27.3% Household textiles • 2011 • 2012 utensils • Per AMPS grew customer base by 16%, against
Slide 32: Sheet Street
Sheet street 2012 2011 Growth Retail sales R1.0 bn R0.9 bn 12.4 % Comparable sales - year 12.0 % - 1st half 14.9 % - 2nd half 9.8 % Unit sales 4.6 % RSP inflation 7.5 % Weighted average space growth (3.4 %) Trading density R22 149 m-2 R19 040 m-2 16.3 % Stock turn (times) 6.5 6.1 Number of stores 23
Slide 33: Sheet Street highlights
Sheet street highlights RLC market share (%) Contribution to sales Accessories and decor Accessories 3.3% and decor 17% 3.5% Domestic textiles R1.0bn 21.0% 21.4% 83% Domestic textiles • 2011 • 2012 • Per Landscape survey 2nd most loved and 2nd most shopped home textile retailer (behind Mr Price Home
Slide 34: Mr Price International
Mr price international • Africa has more cities with a population over 1 million than N. America • Emergence of sizeable middle class will provide fuel for consumer booms in many African countries • Population expected to grow from 1 billion to 3 billion by 2050, outstripping India and China • Worki
Slide 35: Mr Price International
Mr price international FRANCHISED Botswana OWNED Mr Price Apparel 19 Mr Price Apparel 23 12 Lesotho Mr Price Home 9 Mr Price Sport 1 2 Total 28 6 Swaziland Miladys 7 Rest of Africa 28 1 Mr Price Home 5 Nigeria Sheet Street 9 Total 45 24 Namibia • Nigeria – 1 200m2 in Ikeja Mall, Lagos opened 29 Mar
Slide 36: Supply chain and systems
Supply chain and systems Objectives: To improve visibility, ensure sustainable supply, enhance product flexibility and reduce lead times and cost SUPPLY CHAIN • Long-term project to reduce the number of ‘touchpoints’ between point of manufacture and store • As a consequence of previous initiatives,
Slide 37: Sourcing
SOURCING Long- term project to reduce country risk • Reduce dependence on China in favour of Bangladesh, Cambodia, Vietnam, Mauritius and RSA • Increased factory direct imports by 72% in last year • Pre-season briefing and collaboration with certain key suppliers reduced their lead times from 4 to 3
Slide 38: Migration through the LSMs
Migration through the lsm'S 3.5 LSM’s targeted by MPC MPC customers per LSM (AMPS – Jul 2011) 3.0 2.5 10 4 14% 8% 5 Number of households (m) 2.0 11% 9 1.5 17% LSM 6 1.0 22% 8 13% 7 0.5 15% - LSM 1 LSM 2 LSM 3 LSM 4 LSM 5 LSM 6 LSM 7 LSM 8 LSM 9 LSM 10 2006 2009 2012 2015 (Forecast) Source: S
Slide 39: Driving profitable growth
Driving profitable growth • In FY 2013 35 33 – Targeting space growth of 5% 30 – 73 new stores planned 25 st 18 (1 half 37 – confirmed 31) 20 20 – Space expansion of high performing stores 5 – 4 000m 2 15 10 • Continued right sizing of stores 10 7 15 5 15 • st Expect RSP inflation of ±6% in 1 half F
Slide 40: Passion Value Partnership
Passion VALUE PARTNERSHIP who we are WHAT WE DO How we do it