Mr Price Case Study

The Mr Price Group is a South African value fashion retailer. According to It is one of the fastest growing retailers in South Africa. The Mr Price Group operates 1135 stores in five African countries and 15 franchised stores throughout the continent. Majority of its operations are in South Africa where it has 1066 stores. The first Mr Price store was opened in 1985, however the company began growing in the 1990’s (Mr Price, n.d.). The founders of Mr Price, Stewart Cohen and Laurie Chiappini felt that clothing prices were too high and had the vision to provide fashionable clothing at a reasonable price(Mr Price, n.d.).

The Mr Price Group is listed on the Johannesburg Stock Exchange (JSE:MPC), with a market capitalisation of R64 Billion it

Mr Price is included in the JSE top 40 social responsibility index (Mr Price, 2015b).

2. FINANCIAL PERFORMANCE (Financial ratios lang term solvency) The Mr Price Group has achieved sustained growth since its listing on the JSE. According to Mr Price (2015c) in the last 29 years the group has achieved annual compound growth of over 23% and 25% in headline earnings per share and dividend per share respectively. The return of equity is 51%. in the last reporting period. As shown in figure 2.1 it has increased its revenue from R294 million in 1992 to over R18 billion in the 2015 reporting period.

Mr Price (2015b) states that this growth is largely driven by Mr Price, which contributes approximately 60% of the group’s revenue, the Mr Price brands (Mr Price, Mr Price home and Mr Price sport) together constitute 83% of group revenue. Sales in South Africa grew by 12% in the previous reporting period, online sales grew by 110%. Figure 1: Mr Price revenue

Supply Chain

Mr Price sources 83% of its merchandise from China, India, Pakistan and Vietnam, the rest is sourced from local manufactures in South Africa who may also source offshore (MR Price, 2012). This makes them susceptible to currency fluctuations.

Mr Price introduced an inventory management system called Project Red Gold in 2008. It is a data handling and forecasting system that enabled it to enhance its supply chain and merchandising process. This system has reduced inefficiencies in the pipeline and improved the group stock planning and reduce inventory as a percentage of sales. According to Mr Price inventory only increased by 5% between 2008 and 2011 compared to sales increases of 48% in the same period.

3.4. Growth Strategy

Mr Price’s current and future growth strategy is to grow operating margin, by increasing efficiency of their retail space. This they aim to achieve by enlarging existing Mr Price stores and opening new stores and elimination excess space in sheet-street and Mr Price home stores. Standard Bank Securities (2014) states that group management is focused at increasing store trading density, focusing on refurbishing exiting store (creating a new look) and expanding 30% of its stores by 35%. The strategy is paying off, the new “look stores” generate double the trading density of existing