Shares in South African budget clothing and furniture retailer Mr Price tumbled on Thursday after the firm reported a slowdown in sales in the first four months of its financial year, citing a slow economy and squeezed consumer.
The retailer’s shares fell 11% to R156.21 after it posted a 2.5% drop in comparable store sales for the four months to August 3.
Mr Price, known for its no-frills clothing and furniture, said earlier this year that it was anticipating a tough first half of the year but expected an improvement in the second half.
Analysts said the results were disappointing, even taking into account the company’s earlier warning. “The market was expecting a better number. ..the numbers were poor,” said Ryan Woods, a trader at Independent securities.
“The retail environment; there just isn’t sufficient disposable income to help drive sales. ..the consumer industry is under a lot of pressure and like all retailers, they’re feeling it,” Woods said.
Retailers in South Africa are struggling to boost sales growth as a slowing economy, high unemployment and rising fuel costs reduce consumers’ spending power.
South African retailer Shoprite earlier this week missed their full-year earning forecast.
Mr Price, which said early signs from spring and summer sales showed performance was improving, reported R7.5 billion ($491.97 million) of retail sales and other income in the four months to August 3, 1.1% up on the same period a year earlier.
“Looking ahead, the trading environment is expected to be challenging as global markets remain uncertain and local economic growth is forecast to be muted in 2019,” it said.
The Durban-based company, which withdrew from Australia earlier this year due to low returns, has said it expects to open 70 new stores this financial year.