Mr Price pays dividend of 398c a share

An increased dividend of 398.0c was declared‚ up by 26.8%.

Retail sales for the period increased by 12.7% to R13.3bn and comparable sales by 7.3%. Total revenue‚ which includes retail sales and other income‚ increased by 13.2% to R13.7bn.

"The group aims to be a top performing international retailer and has been investing and incurring costs ahead of revenue generation to achieve this. We are pleased that despite this commitment‚ a tightening in our approach to credit we have been able to deliver these results‚" chief executive Stuart Bird said.

The clothing stores increased sales and other income by 12.5% to R9.8bn and comparable sales by 5.9%. Operating profit grew by 14% to R1.7bn.

The home stores meanwhile‚ increased sales and other income by 15.2% to R3.9bn with comparable sales up by 10.8%. Operating profit rose by 31.9% to R491.6m.

Mr Price said that gross trade receivables increased by 28.4% to R1.6bn and net bad debt as a percentage of the debtors book increased from 3.9% to 6.5% as the payment behaviour of some new accounts opened in the prior financial year was not in line with expectations.

Cautious approach

The company adopted a more cautious approach to credit by amending the requirements for opening new accounts‚ lowering initial credit limits and opening a higher proportion of accounts with six-month payment terms.

"There is no doubt that our cautious approach to credit is the right one and although it has probably cost us some growth‚ we are more focused on preserving our cash model‚" Bird said. The company has imposed a limit of cash sales to be at least 75% of total sales (currently 80.4%).

The company's return on equity of 51.1% is the highest achieved to date.

"Business and consumer confidence are at low levels. Despite these challenges‚ the group is confident about the future and in its five year business strategy‚ capital expenditure of R2.5bn is planned‚" Bird said.

Looking ahead‚ the group noted that additional stores are planned in Nigeria and Ghana in the new year‚ although initial growth is expected to be limited by the lack of available sites.