CAPE TOWN: Shares in South African retailer Mr Price Group tumbled nearly 18 percent on Friday, their biggest one-day drop in more than 15 years, after the company’s third-quarter sales figures disappointed.
The discount fashion and homeware retailer said sales in the three months through December, including the Christmas period, rose 6.5 percent from a year earlier and comparable sales, excluding new stores, increased 3.4 percent from a year ago.
That contrasted with much stronger sales growth reported by industry rivals Truworths and The Foschini Group this week, despite weak economic growth in South Africa, sending their shares higher.
Consumers in Africa’s most developed economy are under pressure from high unemployment and rising food and fuel costs. Mr Price said in a statement that the trading environment “continued to be challenging”.
Sales at retailers such as Truworths and Foschini have been boosted by high levels of in-store credit while Mr Price sells about 80 percent of its merchandise in cash.
“The market was disappointed with the numbers (from Mr Price), the market had a higher expectation,” head trader at Cratos Capital Greg Davies said.
“Up until a few years ago, they were growing sales of up to 20 percent every quarter and now that they are unable to do so, the market is disappointed,” he said. Mr Price shares closed 17.8 percent lower at 156.96 rand, their biggest daily decline since November 2000 and their lowest closing level in 19 months.
