COMPANIES: Lights out for Mr Price while other retailers back up power to cope with rolling blackouts

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As the country remains firmly in the grip of power outages every day this year, at least one retailer seems to be taking significant strain.

Bianca Lakha, junior research analyst at Old Mutual Wealth Private Client Securities, says the outlook for local fashion retailer Mr Price remains challenging, with constrained consumers preferring credit, while the group has had to absorb the high cost of moving to alternative energy sources to cope with rolling blackouts.

“This underperformance resulted in group retail sales, excluding Studio 88, rising 1.2%,” says Lakha. Last week, Blair noted that the impact of rolling blackouts can be seen in the significant variances in sales growth between stores that have back-up power and those that do not. The group has since taken urgent steps to limit the effect of load shedding, albeit at considerable cost.

“While Mr Price will continue to advance credit prudently in order to preserve the quality of its credit book, SA consumers’ increased appetite for credit is likely to benefit peers with less stringent credit approval processes,” she says. As at 31 December 2022, at least 1,455 stores had back-up power, representing 70% of TFG Africa’s turnover, with plans to ensure all stores have back-up power over the next few months.

 

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