JOHANNESBURG (Reuters) – South African retailer Mr Price Group Ltd reported a much slower sales growth for the third quarter, as financially constrained consumers spent less on clothes during the crucial months of November and December.
An increase in value-added tax, a rise in unemployment and inflation levels, coupled with higher fuel prices and an interest rate increase in November have reduced spending power in South Africa, Mr Price’s largest market.
This also resulted in lower Black Friday sales in November, while in December school holidays commenced a week later than the corresponding period, the group said in a statement.
During the three-months ended Dec.29, group retail sales and other income grew 3.5 percent to 7.1 billion rand ($517.36 million), while total sales of 6.7 billion rand were 2 percent higher. This compared with an 8.5 percent increase in total sales in the corresponding period.
Comparable store sales were down 0.8 percent.
Mr Price, known for its no-frills clothing and furniture stores, has grown for more than three decades by undercutting competitors and catering to thrifty shoppers’ fashion needs. But it too was not immune to the deteriorating South African consumer confidence.
($1 = 13.7234 rand)
Reporting by Nqobile Dludla; Editing by Subhranshu Sahu