Fashion retailer Mr Price has seen strong growth this year with its share price up about 80%. Over the past 25 years, its stock has risen about 4,400%, making it one of SA’s most successful retailers.
The company’s market value of R72bn now exceeds that of Woolworths by R10bn, with Pepkor on R94bn, Truworths R41bn and TFG R55bn.
According to Aeon Investment Management equity analyst Shaakir Salie, a contributor to Mr Price’s performance is its deep understanding of mass-market fashion trends.
Mr Price had consistently demonstrated its ability to predict and meet the needs of its core customers, delivering products that are trendy and affordable, allowing the group to maintain a competitive edge in a crowded market, said Salie.
The group’s strategy had been focused on the domestic market, unlike some of its competitors who had ventured abroad, he said. The group’s successful acquisitions of brands such as Yuppiechef, Power Fashion and Studio 88 had expanded its reach across various income segments, ensuring its appeal to a broad consumer base.
Salie said Mr Price’s focus on return on capital and maintaining a strong balance sheet had shielded it from many of the financial risks that typically affect retailers. With a strategy that limits reliance on credit sales by operating primarily as a cash retailer, Mr Price had built a strong financial position, while resonating with its customer base.
“Their focus on the mass market insulates them from some of the pressures faced by higher-end retailers. For instance, international online brands tend to attract wealthier consumers, while Mr Price remains the go-to apparel retailer across lower household income brackets. Notably, 59% of their customers earn below R10,000 a month,” he said.
Despite the rise of international e-commerce giants, such as Shein and Temu, Mr Price remains unfazed and confident in its ability to retain its market share. Earlier this year CEO Mark Blair, who has been at the helm for 18 years, acknowledged the growing influence of foreign e-commerce players but pointed out that many of the company’s customers continued to prefer shopping in-store, even though they used the online platform for research. This after the group suffered a loss in its online sales.
“They have told us over the past 12 years that they want to search online, occasionally shop online and come into the store to buy,” he said.
The group is hopeful that a more stable political environment under the government of national unity, lower inflation, interest rate cuts and the two-pot retirement system will boost consumer spending and further support the company’s growth trajectory.
Salie said Mr Price’s ability to manage supply chain challenges had set it apart from its rivals. The group negotiated fixed freight rates and diversified its shipping partnerships to ensure timely product delivery, even amid global disruptions, he said.
“Mr Price’s ability to align with SA’s mass-market fashion preferences has been a significant driver of strong like-for-like sales, keeping them ahead of competitors such as Truworths, TFG and Woolworths,” Salie said.
Its ability to stay ahead of the curve through a combination of sound financial practices, strategic acquisitions and an unwavering focus on its core market made it well-equipped to continue thriving, Salie said.
“Other retailers are adapting in different ways. TFG, for example, has heavily invested in its online platform, Bash, which they claim is boosting in-store traffic alongside digital sales.
“Woolworths and Pepkor tend to take limited fashion risk by focusing on essentials such as school uniforms and basic clothing items, giving them greater protection against global economic uncertainties. Truworths presents a more complex picture due to their UK exposure, which adds another layer of risk to their operations,” he said.
“Overall, while the industry faces long-term margin compression from increased competition, Mr Price appears well-equipped to navigate these challenges and sustain its performance,” said Salie.
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