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									                                        apparel
             The division has enjoyed another exceptional trading year. Sales
             increased by 24,0% to R4,5 billion and operating profit increased
             by 33,7% on the back of the 46,5% achieved in the previous year.
             This brings the five year compound growth rate in operating
             profit to 31,3%. The division currently represents 52,7% of total
             group sales.

             Customers continued to respond well to our fashion interpretations
             at exceptional value. The number of shoppers frequenting our stores,
             as measured by AMPS, increased by 11,2%. The division continued
             to gain market share, which increased to 11,1% as measured by
             the RLC. In excess of 92 million units were sold during the year.
             Independent research conducted by Bateleur Khanya has shown that
             Mr Price remains the most loved and frequented retail apparel brand
             in South Africa.


                               24,0%
                      Sales grew by
                       to R4,5 billion
             Weighted average retail space grew by 6,7% through a mix of new
             and expanded stores. The division opened nine “express” stores
             during the year. This format enables Mr Price to trade in locations not
             previously possible and although lower sales densities are achieved,
             the lower capital expenditure and operating overheads result in good
             operating margins. This format has the potential to expand from the
             current level of 17 stores to approximately 70 stores.

             The strong performance of the store expansions, which have
             exceeded feasibility projections, has had a positive effect on
             operating profit, as has the impact of Project Redgold. Phase one
             of this project is nearing completion and has resulted in the
             division improving stock turn from 6,8 to 7,3 times in a difficult
             trading period.



24   Mr Price Group Limited Annual Report 2009
Mr Price Group Limited Annual Report 2009   25
             Sales increased by 53,2% to R367 million off a weighted average
             trading space of 38 846m². The chain has achieved a comprehensive
             national footprint in just its second full financial year, by opening
             eight stores during the year to end on 31 stores.



                              53,2%
                            Sales up by
                      to R367 million
             The impact of tailoring and enhancing assortments, which enables
             higher volumes per style to be purchased, is starting to be felt. In
             addition, the resourcing of apparel merchandise, which was aligned
             with Mr Price during the year, will lead to lower input prices from
             common suppliers and will therefore result in further value for
             customers, with deflation in input prices.

             The highly discretionary nature of Mr Price Sport merchandise
             means that in tough economic conditions, demand for sporting
             goods, particularly equipment and technical footwear, will be
             impacted. Despite these challenges, the division sold in excess of
             600 000 T-shirts, over 450 000 balls and almost 1,3 million units of
             fitness apparel.

             Independent research conducted by Bateleur Khanya revealed that
             shoppers are very staunch advocates of the brand and the brand
             affinity score of 6,6 is exceptional for a new business. The division
             expects to record further gains in market share as consumers
             continue to respond to the authentic value-driven offer.




26   Mr Price Group Limited Annual Report 2009
Mr Price Group Limited Annual Report 2009   27
             Miladys has delivered another strong set of results, growing sales
             by 10,2%, exceeding R1 billion for the first time. Comparable sales
             grew by 4,0%. Weighted average net trading space increased by
             10,8% and the division’s net trading space closed on 71 287m².
             During the year, 20 new stores were opened, including six stand-
             alone René Taylor stores, which cater for the fuller-figured woman.
             In shopping centres where René Taylor was removed from Miladys
             and introduced as a stand-alone store, total sales have increased
             by 26%.


                    10,2% exceeding
               Sales up by

             R1 billion for the first time
             Gross margins improved slightly on the prior year due to an improved
             markdown performance which was partly offset by higher carriage
             costs.

             Statistics provided by the RLC highlighted that Miladys has
             increased its market share in both total ladieswear and outsize
             ladieswear during the year. Excellent sales performance in active-
             wear was achieved, which grew by 44% in René Taylor and 36% in
             Miladys. Sleepwear, aided by the introduction of loungewear and
             younger “sporty” styles, grew by 18%.

             Miladys was the proud winner of the Ask Afrika Orange Index – Top
             Clothing Retailer 2008 award, which is an annual, independent
             benchmark of South African companies. This index has consistently
             provided valuable rankings of service benchmarks and best-in-class
             companies, which includes the major retailers.

             Looking ahead, Miladys will continue to focus on offering customers
             a complete wardrobe in a lifestyle of her choice by delivering on
             fit, co-ordination, value and service levels. Added attention will be
             given to further extracting the value opportunities in René Taylor, as
             well as improving trading densities.




28   Mr Price Group Limited Annual Report 2009
Mr Price Group Limited Annual Report 2009   29
             Trading has remained challenging in this cyclical segment as
             customers, particularly those in the higher LSM categories who are
             exposed to debt, curtailed their spending on discretionary homeware
             purchases.


                                13,3%
                            Sales up by

                        to R1,9 billion
             The division recorded an increase in sales of 13,3% and comparable
             sales, which included sales of expanded and relocated stores in
             like-for-like locations, was up 2,5%. Mr Price Home has increased
             its number of shoppers compared with the AMPS universe, which
             was flat. Particularly pleasing was the growth in the number of
             black shoppers, which now stands at 40%. This translated to a slight
             growth in market share and the number of units sold increased by
             4,4% to 35 million units.

             Weighted average trading space grew by 24,3% which resulted in
             trading densities dropping from R14 139 per m² to R12 880 per m².
             In this weak trading environment, the division maintained the
             gross margin percentage achieved in the prior year. Despite
             success achieved in implementing a labour scheduling system that
             allowed for better management and tighter control of staff costs,
             an increase in other operating costs led to operating profits being
             down on last year.

             The division continued to focus on improving customers’ shopping
             experiences and during the year was rewarded by winning the Retail
             Awards 2008 – Home and Lifestyle stores category.




30   Mr Price Group Limited Annual Report 2009
Mr Price Group Limited Annual Report 2009   31
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             The division increased sales by 9,7% to R0,8 billion, with weighted
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             average trading space growing by 13,1%. Comparable sales were
             0,9% higher, also being affected by the cyclical nature of sales of
             semi-durable products. Selling price inflation of 9,7% was recorded,
             primarily as a consequence of changes in merchandise mix.



                            9,7%
                          Sales up by
                    to R0,8 billion
             The division opened 24 new stores during the year, bringing the
             total to 244 at year end. The new store layout and wrap, which was
             introduced as a test last year, continues to be successful and stores
             revamped during the year have increased their sales growth post
             revamp and achieved their return on capital employed targets. This
             rollout will continue in the new year.

             Despite the last two financial years being challenging as a result
             of consumers being impacted by high costs of living, including fuel
             prices and interest and inflation rates, the division has achieved a
             five year compound annual growth rate in sales of 24% and operating
             profit of 76%. Tight expense control will position the division well
             when the economic environment improves.

             The small store format, which averages 208m², allows for an intimate
             shopping experience that builds long-lasting relationships with
             customers. The division was recognised by being voted KwaZulu-
             Natal’s best home retailer for three years running.




32   Mr Price Group Limited Annual Report 2009
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                                                                                                          Mr Price Group Limited Annual Report 2009   33
     Over the years, the Mr Price Group brands, with their focus on fashion and value, have developed into some
     of the most desired brands in sub-Saharan Africa.

     What started out as a franchise “test” initiative with one pilot store in Lusaka, Zambia in 2006, has
     subsequently grown to 17 stores and has been embraced by all our franchisees who have set growth plans
     to expand our Mr Price Group brands into their various markets. In each new market we have entered, the
     group’s philosophy of passion, value and partnership has been adopted, which is evident in all aspects of
     our international operations.

     The small but focussed team includes functional experts who use the synergies of the various Mr Price group
     businesses to assist franchisees to identify, plan, open and successfully manage stores in various countries.
     Guidance is provided across business planning, store location selection, store design, fixtures and fittings,
     merchandise planning, staffing, training, pricing, promotions, systems and supply chain management.

     The division effectively provides the equivalent of a turnkey operation and provides ongoing management
     support after the initial opening. The division continues to research and identify potential markets in which
     we can create a substantial presence and in so doing, identify the optimal model with which to enter the
     relevant market. The unique legislative, supply chain and trading nuances in every new territory have to be
     fully understood in the research phase before committing to any new stores.

     The store performance to date has been exceptional, with encouraging sales, tight expense control and
     efficient stock management principles applied. Our instore merchandising standards and ambience, continue
     to delight and exceed customer expectations.




34   Mr Price Group Limited Annual Report 2009
The table below shows franchise stores open at the end of March 2009:




             Zambia                         1
             Mozambique                     1                       1                           2
             Kenya                          2                       1                           1
             Ghana                          1
             Tanzania                       1*                      1*
             Mauritius                      1                       1
             Saudi Arabia                                           3

             Total                          7                       7                           3
             *Combined store


Significant achievements since inception include:

    •   franchise stores have sold 2,3 million units over the past financial year, with a total of 3,2 million units
        being sold from inception two years ago;

    •   the total trading space of the franchise stores opened to date amounts to 16 930m2;

    •   over 520 jobs have been created in foreign countries;
    •   all staff from these 17 stores have received indepth teambuilding, customer service, merchandising,
        store safety and stock receiving training sessions, often facilitated through translators; and

    •   all our franchise stores have attracted high profile attention and support from consumers across all
        economic and social levels.


Mr Price has opened stores in Malawi and Uganda at the end of April 2009, with a further 13 stores
planned to open across sub-Saharan Africa and Indian Ocean Islands in the next financial year.

Planned new stores:




               Zambia                                      3                              4
               Kenya                                       1                              1
               Uganda                                      1
               Malawi                                      1
               Angola                                      2                              2

               Total                                       8                              7



We are excited by the rollout plans we have for various markets and will be focussing our attention on
identifying the countries and regions that hold the most potential for our brands. The group is committed to
identifying and partnering with individuals who mirror our vision, commitment and belief in our brands and
philosophy.




                                                                                    Mr Price Group Limited Annual Report 2009   35
      Credit environment

      Against the backdrop of a weakening local economy, high levels of consumer indebtedness and further
      prospects of job losses, the credit environment is challenging and will remain so for some time. Significant
      attention is still being devoted to reducing the levels of risk that we accept and conversely, on managing the
      risk that has already been accepted through our collection strategies.

      We have started implementing our customer relationship management strategy, with the ultimate aim
      of improving customer activity, retention, brand loyalty and account profitability. We are also investing
      in data analytics to increase our understanding of customer behaviours that positively influence account
      management.

      Account management

      The 2009 financial year has been a good year for the financial services division with gross receivables
      increasing by 23,3% to R668,8 million, resulting in a 30,2% increase in gross interest income.


      Trade receivables (gross)(R’000)                                      668 801                      542 305
      Total active accounts                                                 817 449                      727 216
      Average balance (rand)                                                    818                          746
      % of debtors able to purchase on credit                                  90,1                         89,5
      Retail sales analysis (% of total sales)
        - cash                                                                  84,0                         84,2
        - credit                                                                16,0                         15,8
      Bad debt (net of recoveries, excluding collection costs)
        - % of credit sales                                                      3,2                          4,1
        - % of debtors                                                           6,6                          8,6
      Impairment provision % of debtors (year end)                               9,8                          9,0

      A dynamic and statistically derived approach to collections through the use of Probe has been implemented
      across the entire debtor base with pleasing results. The recovery of arrears prior to charge-off has remained
      comparable with the prior year. The percentage of customers that can buy increased marginally on last year
      to 90,1% and the qualifying payment percentage for arrear customers was also maintained at 90%, both
      ratios being among the highest in the industry.

      Net bad debt as a percentage of credit sales and debtors has decreased, despite tougher economic conditions
      as a result of a dynamic collections strategy, conservative account approval procedures and the impact of
      a maturing debtors book. The outlook for the new financial year remains cautious as the current poor
      economic conditions are expected to continue, resulting in the provision for impairment increasing to 9,8%
      of the gross debtors book.




 36
36    Mr Price Group Limited Annual Report 2009
Credit scorecards and models

Credit limit granting criteria are aligned to the
National Credit Act requirements and are capped at
conservative levels, minimising our exposure. Risk
strategies are underpinned by sound application
scorecards and business rules derived from both
credit bureau and internal data sources.

The group has developed a pro-active approach to
risk and when the need arises, changes to the scoring
processes are made, realigning our exposure. We
subscribe to benchmarking reports which continue
to show the quality of our portfolios pertaining to
delinquency levels, to be consistently better than the
industry average.

In the latter half of 2008, an improved scoring
solution was implemented for the Mr Pricemoney
and Sheet Street cards in support of the target
market. Early signs show an improved approval rate
through an optimised selection process, with an
expected bad debt experience at similar levels to the
year under review.

The methodology used to determine an impairment
provision is commonly known as the Markov Chain
Analysis, which utilises historical transitions of
accounts over a period of time which are applied to
all status levels, including current, to determine the
probability of receivables progressing to charge-off.
Additional risk factors not present in the historical
data are considered and evaluated in arriving at a
final provision for impairment.
Account origination

A range of competitive six, 12 and 24 month interest-
bearing products are in place for Mr Pricemoney,
Sheet Street and Miladys, while Miladys also has a six
month interest-free product. In addition, we offer our
customers payment and lost card protection as well as
protection against identity theft with approximately
85% of our customer base taking advantage of one
or more of these products.



Gross receivables
R’000               Mr Price Mr Price Home Mr Price Sport    Miladys Sheet Street     Total 2009 Total 2008
6 months             85 395         25 347           1 384   102 892*     17 263         232 281           233 145
12 months           248 128         53 167           6 048    86 179      32 035         425 557           298 794
24 months                           10 963                                                 10 963            10 366
Total               333 523         89 477           7 432   189 071      49 298         668 801           542 305

* interest-free




                                                                              Mr Price Group Limited Annual Report 2009   37
     The division is a comprehensive service provider to     During the year the division delivered on a number
     the group’s trading divisions, including franchise      of projects of strategic importance and continued
     stores in foreign territories and comprises the         to roll out the key merchandise initiatives under the
     following departments:                                  collective Project Redgold.
     • Space acquisition;                                    Highlights of the year include:
     • Store development; and                                • Ongoing improvements to our store systems to
     • Space administration and legal.                         include store associate training, elimination of
                                                               paper based communications and improved
     These departments are responsible for the                 transactional efficiencies;
     implementation and control of the group’s strategic
     growth strategies. The key responsibilities remain:     • Further refinement of customer behaviour
                                                               modelling systems, improved credit scorecarding
                                                               techniques and revised customer segmentation
     • Site identification together with the acquisition of     capabilities. These enhancements were designed
       new and expanded space;                                 to improve the credit granting and credit
     • Planning, design, management and control of             management processes and to allow us to
       store layouts;                                          be more specific in the way we communicate to
     • Procurement of store shopfitting components;             our customers;
     • Project management of the fitting and                  • Significant rollout of the merchandise
       construction of new and expanded stores; and            management applications, under the group
     • Negotiation and cost control over lease renewals        wide project called Project Redgold, to all
       and the administration thereof.                         other divisions, having rolled these out to
                                                               the Mr Price division in the previous year,
     The division adheres to the group tenet of operating      with significant improvements in all aspects
     as a value retailer in all its activities. Its focus      of merchandise performance.
     continues to be to provide space and to fit stores       The key components of this rollout are:
     at the lowest possible cost, while delivering an
     exceptional store environment to the customer.            o Strategic allocations – which has resulted in
                                                                  improved allocation decisions, fewer stock outs,
     During the year the focussed, dedicated and                  lower markdowns and increased stock turns.
     experienced team have succeeded in increasing                Merchants are able to quickly and strategically
     and fitting the group’s net trading space by                  forecast stores’ future merchandise needs
     58 983m², which represents an increase of 13,4%.             and address these needs through a holistic
     As at 31 March 2009, the group traded from                   allocation of future orders to stores;
     498 884m² of retail space across Southern Africa.         o Fashion pick – which has resulted in a more
                                                                  accurate forecast of store demand at a
     Store projects completed during the year numbered            colour/size level for one-off fashion items and
     146, consisting of new, expanded, revamped                   so allows for optimal distribution in the
     and franchise stores. In the year 113 leases were            short term of merchandise held back in the
     renewed, representing 23% of the opening base.               distribution centre;
                                                               o Assortment planning – which allows merchants
     The division is well structured and resourced to             to visually plan the key assortments across
     secure the group’s strategic growth objectives.              time, supplier base and input. This results in
                                                                  more accurate buying and allocation of
                                                                  quantities by store, which in turn means an
                                                                  improved range of merchandise delivered to
                                                                  and presented in store;
                                                               o Demand and fulfillment solution – this will
                                                                  address replenishment product at a store
                                                                  SKU level, which will significantly reduce
                                                                  the stock investment in replenishment
                                                                  merchandise while at the same time increasing
                                                                  customer service levels at stores; and
                                                               o Improved merchandise ordering processes
                                                                  to accommodate the needs of the above
                                                                  initiatives.
                                                             • Distribution centre productivity improvements
                                                               have enabled a quicker merchandise flow
                                                               through the regional supply chain and the
                                                               implementation of standardised processes
                                                               has reduced operating costs per unit of
                                                               merchandise processed;
38   Mr Price Group Limited Annual Report 2009
• The successful development and implementation       With regard to outbound logistics, we plan to go live
  of an order application that allows for multiple    with dynamic route master planning software in the
  deliveries to multiple locations has reduced        second quarter of the upcoming financial year. On
  logistics costs by enabling direct shipments        the current static route master, stores are delivered
  from origin to the distribution centre closest to   according to a fixed schedule. The dynamic system
  market and reduced transport costs to stores;       will increase distribution vehicle utilisation by up to
                                                      30% and will significantly reduce our carriage costs in
• The outsourcing of quality assurance to an          Southern Africa.
  international agency has allowed us to implement
  quality assurance inspections at source. This       Another important group initiative is the replacement
  has ensured that defect-free merchandise is         of our payroll system, incorporating an integrated
  introduced into the supply chain; and               human resource management solution, and the
                                                      implementation of a new call centre in our Financial
• Speed to market, especially for fashion             Services division, to enhance our interaction with our
  merchandise, is a key differentiator for the         card based customers.
  apparel chain and we have achieved significant
  success in this area with various resourcing        In addition, we have embarked on a project to replace
  programmes from SADC countries that have            our existing merchandise planning solution with an
  reduced lead times from 120 to 42 days from         offering that we believe better suits our needs, scales
  product inception through to delivery.              to our planned methodologies in this area and will be
                                                      easier to administer.
The next phase of the project will be to:
• Complete the implementation of the direct
  delivery system referred to above in the other
  trading divisions; and
• Focus on inbound supply chain improvements,
  including distribution centre and supply chain
  management solutions, designed to give us total
  visibility of the entire product lifecycle from
  inception to receipt in stores. Marrying this
  product lifecycle management software together
  with our supplier relationship management
  systems will give decision makers in the business
  extremely powerful tools for order and vendor
  management in the year ahead.




                                                                               Mr Price Group Limited Annual Report 2009   39

								
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