Mr Price | A Wardrobe malfunction
MRP's attractive positioning in the market (value fashion) was diluted in the current period due to poor execution on the product offer, underestimating the impact of high inflation on volumes and inability to adapt offer for changes in the market. The higher frequency of fashion errors (since 2015) and misinterpreting the reaction of the MRP consumer raises risks about internal processes and appropriateness of its sourcing model. The resultant volatility in GP margin dampens the outlook for above market earnings growth in the Group.Management has responded by taking corrective action to address issues in the product offer but is still in the process of reviewing its sourcing model. Addressing issues in sourcing requires a structural shift in the business model and therefore will only take place over the medium-term. This a key risk to GP margin and product execution.
Mr. Price is engaged in the business of omni-channel retail distribution through 1 150 corporate-owned, 15 franchised stores in Africa and its online channels. Co.'s retail chains focuses on clothing, footwear, sportswear, sporting goods, accessories and homewares. Co. operates three reportable segments: The Apparel segment retails clothing, sportswear, footwear, sporting equipment and accessories; The Home segment retails homewares; and The Central Services segment provides services to the trading segments including information technology, internal audit, human resources, group real estate and finance.
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