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Annual Results Presentation March 2016
1
53 weeks 52 weeks
Revenue R20.0bn 10.5% 8.4%
Operating profit R3.6bn 17.1% 15.5%
Diluted HEPS 1 012.9c 17.1% 14.6%
Dividends per share 667.0c 15.0%
Return on equity 50.3%
8
10
12
14
16
18
20
0
200
400
600
800
1 000
1 200
200
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20
08
200
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Op
era
tin
g m
arg
in (
%)
HE
PS
& D
PS
(c)
HEPS DPS Operating margin
The remainder of the presentation is based on 52 weeks unless otherwise stated
THE GROUP HAS ACHIEVED A 30 YEAR CAGR IN HEPS OF 23.0% & DPS OF 24.6%
2015 real GDP growth 1.3%. Weaker Q4 of 0.6% indicative of 2016 expectations
Weak & volatile currency
CPI averaged 4.6% in 2015, but outside targeted range in Apr 16 at 6.2%. Expected
to average 6.6% in 2016
Business confidence unchanged in Q1 16 at a 5 year low
Unemployment rate increased in Q1 2016
Debt to disposable income still high, but in decline since 2008
Prime interest rate increased 4 times during the year to 10.5%
Consumer confidence recovered slightly but still negative
- financial position of households in the next year expected to improve
- economic position in RSA negative, time to buy durables declined further
2
3
Confronted
headwinds
Economic environment in RSA
Trading conditions in Africa
High sales base
Introduction of new credit legislation
Maintained long-term
view
Significant investment in major projects
Opened stores in an international developed market
Transition of merchandise resourcing strategy
Strategic merchandise changes in Miladys
Delivered sound
results
Good cost control & improved H2 GP%
5 of 6 divisions achieved double digit profit growth
Strong profit performance in core operations
Improved operating margin
(120%)
(100%)
(80%)
(60%)
(40%)
(20%)
0%
20%
40%
(60%) (40%) (20%) 0% 20% 40% 60% 80%
Late
st earn
ings g
row
th %
Share price change %
MRPG share price 32% lower than Mar 15 - PE ratio declined from 33.3 to 19.1,
however earnings growth in top quartile
Graph excludes JSE listings in current year & outliers
4
MRPG
Share price change %
5
% change
Cents 2016 2015 Annual H2
53 weeks
Basic 1 046.5 917.3 14.1% 13.4%
Headline 1 057.8 919.7 15.0% 14.9%
Diluted headline 1 012.9 865.1 17.1% 17.4%
52 weeks
Basic 1 032.9 917.3 12.6% 11.0%
Headline 1 035.2 919.7 12.6% 10.8%
Diluted headline 991.2 865.1 14.6% 13.2%
Consensus estimates
i-Net 968.5
Bloomberg 961.8
Net weighted average number of shares in issue up 1.1% to 252 785 945
LTI schemes - shares that vested exceeded shares that were acquired
Lower dilution impact
- average share price increase of 0.7%, offset by
- reduction in w. avg number of options in issue of 17.8%
6
Dividends based on 53 week HEPS
More closely aligned interim & annual dividend payout ratios
Final dividend growth therefore lower than H2 53 week HEPS growth of 14.9%
Annual payout ratio expected to be maintained at 63% in the medium term
Since the change in control in 1986 dividends have never decreased
Cents 2016 2015 % change
Interim 248.0 211.5 17.3%
Final 419.0 368.5 13.7%
Annual 667.0 580.0 15.0%
Payout ratio 63.1% 63.1%
50.052.5
55.157.0 58.0
62.4 62.7 63.0 63.1 63.1
45
55
65
2012 2013 2014 2015 2016
(%)
Interim Year End Interim Annual
Group Income Statement
7
1 Operating margin increased from 17.1% to 18.2%
Strong growth of 20.8% in core RSA operations
2 Effective tax rate 28.2% (FY15 27.8%). Deferred tax assets not raised on losses
Return on shareholders equity 50.3%
% change
R'm 2016 2015 Annual H2
Retail sales & other income 19 547 18 011 8.5% 8.0%
Cost of sales 11 082 10 186 8.8% 6.6%
Selling expenses 3 819 3 602 6.0% 8.8%
Administrative expenses 1 093 1 147 (4.7%) (3.6%)
Profit from operating activities1 3 553 3 076 15.5% 15.1%
Net finance income 81 87 (7.4%) (30.3%)
Profit before taxation 3 634 3 163 14.9% 13.9%
Taxation2 1 026 878 16.9% 17.2%
Profit after taxation 2 608 2 285 14.1% 12.7%
Loss attributable to minorities (mrpMobile) 3 8
Profit attributable to shareholders 2 611 2 293 13.9% 11.9%
EBITDA 3 785 3 292 15.0% 14.4%
% change
R'm 2016 2015 Annual H2
RSA - bricks 16 938 15 695 7.9% 7.6%
- online1 157 96 63.6% 82.5%
Non-RSA - bricks - corporate owned 1 448 1 377 5.1% 0.8%
- franchise 113 100 12.9% 16.9%
- online2 9 17 (43.2%) (46.4%)
Retail sales3 (comp growth 4.2%, H2 4.4%) 18 665 17 285 8.0% 7.5%
Financial services & cellular4 853 702 21.5% 21.0%
Other5 29 24 18.8% (6.8%)
Other income 882 726 21.4% 19.9%
Total retail sales & other income 19 547 18 011 8.5% 8.0%
Finance income 81 88 (7.4%) (30.3%)
Total revenue 19 628 18 099 8.4% 7.8%
1 Online performing well - growth in mrp 25.7%, mrpHome 119.7%
- channel now profitable
2 Increased threshold for international free delivery, reduction in marketing
3 Total RSA sales up 8.3%, non-SA sales 5.1%
4 Strong revenue growth driven by cellular
5 Club fees & external donations to mrpFoundation
8
7.6 7.14.9 5.5
1.0 0.6 1.4
5.0 5.1
9.7
Price4.3
Price4.4
Price4.4
Price3.0
Mix3.4
Mix2.6
Mix2.6
Mix4.1
0
2
4
6
0
3
6
9
12
15
2012 2013 2014 2015 2016 H2 H1
Sp
ace
gro
wth
%
%
Unit growth RSP inflation W. avg space growth
Sales Growth Analysis
9
Annual cash sales up 9.2%, credit 2.3% & international 5.1%
H2 growth more impacted by Africa & credit
Despite this, MRPG Q4 growth improved on a softer base
- comparable sales growth increased from 3.4% (RSA
4.9%) in Q3 to 6.0% (RSA 7.5%)
- 4 divisions achieved best comp growth of the year
- performance in core RSA market driven by cash sales
- exceeded market growth per Stats SA
13.0 12.811.310.6
9.2 8.5
0
2
4
6
8
10
12
14
2014 2015 2006-2015
Com
p s
ale
s g
row
th %
mrp Group
8.9
6.7
9.510.4
(1.8)
1.3
9.3
(0.8) (0.9)
12.1
(3.5)
4.6
(4)
(2)
0
2
4
6
8
10
12
14
RSA Cash RSA Credit International
Sa
les g
row
th %
H1 H2 Q3 Q4
High sales base to beat in a softer trading environment
10
Sales of R1.6bn constitute 8.4% of MRPG (9.5% of mrp)
Namibia: high sales base Q1-Q3. Q4 grew by 2.8%
Nigeria: re-enabled supply in late Mar 16
All other territories had a better H2
- total sales grew by 24.7%
- Zambia: not comparable for 2 months in H1.
H2 comp growth was higher than H1
Sales contribution % Sales growth (ZAR) Stores
Annual H2 H1 Change Total
Namibia (1.6%) (3.0%) (0.1%) 0 37
Botswana 16.3% 23.8% 8.2% 2 22
Franchise 12.9% 16.9% 8.8% 4 19
Nigeria (29.8%) (73.6%) 31.9% (1) 5
Zambia 48.6% 21.1% 98.7% 3 8
Swaziland 10.0% 12.7% 7.1% 0 7
Ghana 8.9% 10.1% 7.5% 1 6
Lesotho 14.5% 17.6% 10.5% 1 5
Australia 2 2
Total stores 5.7% 1.8% 10.2% 12 111
Including online 5.1% 1.3% 9.5%
Namibia
39.7
Botswana
23.5
Franchise7.2
Nigeria7.1
Zambia6.7
Swaziland6.2
Ghana
4.4
Lesotho
3.91.3
Australia
Operating profit / retail sales & other income
Per analysis on pages 8 & 19
Merchandise GP down 0.1% to 41.9%. Improvement in H2
Cellular GP up from 1.7% to 6.4%
Lower bad debt & credit card fees
Rentals up 9.6% - lower turnover rentals, higher international costs
Employment costs in RSA & African stores up 8.7%
Lower incentives & H2 share based payments, Australian costs
Net FX gain (H1 gain, H2 loss)
Annual increase 7.8% excluding the above
Improvement in all 3 segments in both reporting periods18.2%
17.1%
0.7%
0.5%
(0.2%)
0.1%
2016
Adminexpenses
Sellingexpenses
Grossprofit
Otherincome
2015
Continued Improvement In Operating Margin
11
41.4%*
(PY 41.6%)
19.5% of RSOI
(PY 20.0%)
5.7% of RSOI
(PY 6.4%)
* Calculated on retail sales & cellular income & their respective costs of sales
2015
2016
10
12
14
16
18
Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16
Actual SPOT Average MRPG Cover rate
12
Average spot rate MRPG FEC rate
FX gain in H1 (admin expenses) R102m (includes FEC M2M R83m), H2 loss R26m
Cash flow hedge accounting applied from Q4 FY16
M2M adjustments in equity, released in cost of sales in subsequent periods
H1 FY17 admin expense growth will appear high
ZAR ~28% weaker
~13% weaker
Average Spot: 12.54 vs FEC Rate: 12.07
Hedged 97% of exposureAverage Spot: 15.03 vs FEC Rate: 13.50
Hedged 100% of exposure
13
% growth
Annual H2 H1
Retail sales & other income
Apparel 8.8% 8.3% 9.5%
Home 5.7% 5.1% 6.4%
Financial services & cellular 21.1% 20.2% 22.1%
Operating profit
Apparel 10.2% 11.0% 9.0%
Home 18.1% 15.4% 22.5%
Financial services & cellular 32.5% 13.7% 57.7%
18.3 18.5
14.2
15.917.1
18.2
10
12
14
16
18
20
2015 2016
Apparel Home Group
Operating margin %
Operating
profit
% contribution
Retail sales &
other income
R’m (02 Apr 16) 2016 2015
Non-current assets
Property, plant & equip 1 672 838
Intangible assets 373 328
Other non-current assets1 196 198
Current assets
Inventories2 2 168 1 741
Trade & other receivables 2 136 1 874
Cash & cash equivalents 1 419 2 764
Reinsurance assets3 99 124
8 063 7 867
Equity & liabilities
Shareholders equity 5 620 5 021
Non-current liabilities4 244 213
Current liabilities5 2 199 2 633
8 063 7 867
Financial Position
14
1 Deferred tax & pension fund
2 Inventories excl. GIT up 21.9%
- earlier ownership due to
higher FOB purchases
- ageing profile in line with LY
3 Mainly cash
4 S/line lease liability, loan from
mrpMobile JV partner
5 Current liabilities
- down 1.3% excluding tax
- lower trade payables due to
earlier settlement (FOB) &
timing of year end
- increased FEC liabilities,
53rd week accruals
PPE & Intangibles
15
R’m Total Intangibles PPE
Opening 1 166 328 838
Additions 1 144 1181 1 026
Disposals & impairments (36) (35)2 (1)
Depreciation & amortisation (229) (38) (191)
Closing 2 045 373 1 672
0
20
40
60
80
100
mrp mrpSport Miladys mrpHome Sheet Street Group
%
Space worked per format
Stores
W. a. space
growth
New stores 45 4.0%
Expansions 26 0.7%
4.7%
Reductions 20 (0.9%)
Closures 14 (0.7%)
3.1%
6.6% 5.4% 0.6% (2.8%) 1.1% 3.1%
R’m 2016 2015
Systems 50 39
Distribution centre 730 51
Stores 246 217
1 026 307
1 Mainly merchandise planning / ERP systems
2 Replatforming online system in FY17
FY17 capital expenditure R859m
Stores R337m, Systems R173m, DC R349m
Op
era
tin
g
R1
.9b
n
Increase of 18.3%
Receivables R288m, Inventory R394m, Payables R131m
Up 6.5% - lower book growth but higher interest rates
Included 3rd income tax payment of R404m* in Mar 16
Inve
stin
g
R1
.2b
n In line with LY excluding new DC of R730m*
Fin
an
cin
g
R2
.1b
n
Increase of 18.8%
Includes R789m* share repurchases iro LTI schemes
* Total R1.9bn, will reduce substantially in FY171 419
2 764
46
( 553 )
(1 592 )
( 12 )
(1 142 )
(1 340 )
465
( 813 )
3 596
2016
Other
Treasury shares
Dividends
Long term receivables
PPE & intangibles
Taxation
Interest received
Working capital
Cash from operations
2015
Cash Flow Movements (Rm)
16
2015
2016
Divisional
Review
The state of credit consumers
NCA affordability assessments effective 13 Sep 15
Credit granted declined sharply in Q4 FY151
Q/Q Y/Y
Total market growth 0.2% 5.5%
Retailers (18.8%) (33.8%)
Retailers’ books reflected modest growth of 1.6% (y/y) 1
Consumers in good standing & current - best in 3 years1
Sharp decline in Transunion SA Consumer Credit Index in
Q1 16 - credit health now deteriorating
MRPG credit sales contribution now 17.2%
Fully applied new NCA criteria from effective date
Did not aggressively acquire direct marketing leads
Applications & acceptance rate dropped in Sep
Credit growth slowed from 6.7% in H1 to (1.8%) in H2
Good progress made with dedicated in store credit
specialists - further roll out in progress
18
1 Per NCR Consumer Credit Market Report, Credit Bureau Monitor
12.2
7.5
2.3
7.6
6.25.4
9.88.9
7.3
0
2
4
6
8
10
12
14
2014 2015 2016
%
Axis Title Credit sales growth
Net bad debt / book Impairment provision / book
MRPG focused on credit quality
Gross trade receivables at year end R1.9bn, up 0.5%
Strong book performance, conservatively provisioned
Total revenue growth rate maintained in H2, however mix change
- 1 higher interest rates, lower book growth, introduction of initiation & service fees
- 2 insurance growth slowed in line with new account openings
- 3 cost of sales included in GP% calculation
- 4 airtime, data, handset & VAS revenue
mrpMobile achieved critical mass, profitable in H2
Another year of excellent profit growth
19
% change
2016 2015 Annual H2
Credit - interest & charges1 397 362 9.4% 8.4%
Insurance2 198 177 12.2% 8.5%
Cellular 258 163 58.7% 61.0%
- Commission 1 2
- Airtime sales3 144 132
- mrpMobile MVNO3, 4 113 29
Total revenue 853 702 21.5% 21.0%
Diversifying
revenue
stream
Division most impacted by high sales base, credit & Africa
Double digit growth in mens & kids
Good performance in core RSA market
- annual comp growth 7.2%, H2 7.5%
- sales growth in Q4 was 12.0% & cash sales 14.6%
23 new stores opened (RSA ROGA3 110%) & 13 expanded (ROGA 200%)
Winners of Male & Female clothing categories in the Ask Africa Youth Brand survey
Voted the ‘Coolest Clothing Store’ in Sunday Times Generation Next 2015 study
20
2016 2015 % change
Retail sales1 R11 102m R10 122m 9.7%
Comparable sales 5.2% 12.8%
- H1 5.2% 15.1%
- H2 (Q3 4.1%, Q4 7.3%) 5.2% 11.0%
Unit sales 152m 149m 1.9%
RSP inflation (price2 3.4%, mix 4.3%) 7.7% 8.2%
Weighted average space growth 6.6% 8.3%
Trading density R38 621m-² R37 550m-² 2.9%
1: Excludes franchise 2: Net of markdowns 3: Forecast return on gross assets - stores with more than 3 months trade
Growth in own branded product continues to exceed expectations
- Maxed technical fitness footwear range sales growth >30%
- strong brand authenticity - 3 gold medals in Two Oceans marathon, won Comrades
Marathon down run in record time (3 gold medals)
New in-store directional wrap - test stores sales growth exceeds divisional average.
Targeted store roll out in H1 FY17
10 stores opened (ROGA 68%) & 4 reduced (ROGA 98%)
Test of ‘fitness only’ small format stores will extend geographical reach
Continued strong growth in operating profit
21
2016 2015 % change
Retail sales R1 272m R1 118m 13.8%
Comparable sales 5.3% 4.5%
- H1 3.6% 3.5%
- H2 (Q3 5.0%, Q4 8.8%) 6.8% 5.3%
Unit sales 13m 12m 8.8%
RSP inflation (price 3.9%, mix 1.0%) 4.9% 6.9%
Weighted average space growth 5.4% 11.2%
Trading density R22 592m-² R20 928m-² 8.0%
2016 2015 % change
Retail sales R1 369m R1 396m (1.9%)
Comparable sales (2.5%) 0.9%
- H1 (1.7%) 0.0%
- H2 (Q3 (2.1%), Q4 (5.1%)) (3.3%) 1.7%
Unit sales 8m 9m (7.6%)
RSP inflation (price 7.8%, mix (1.2%)) 6.6% 2.3%
Weighted average space growth 0.6% (0.4%)
Trading density R22 418m-² R22 987m-² (2.5%)
22
Credit sales (53% of total) declined by 7.1% in H2
Merchandise changes impact sales in short term, but will benefit in long term
- sizing aligned to international moderate specifications, eliminating ‘vanity’ sizes
- René Taylor brand discontinued - extended sizes introduced into Miladys brand
Acceptable sales growth in non apparel, intimatewear & accessories performing well
Good cost control unable to offset reduced sales & gross profit %
Intensely focused on target customer & her needs. Positive impact from realigned
merchandise offer & new merchandise director expected in Spring/Summer
Livingroom hards, dining & furniture were the best performing departments
Opened 3 stores (ROGA 169%), & expanded 6 (ROGA 119%)
Reduced space in 6 stores by 31% but grew profit by 12%
Excellent margin & cost control enabled a strong profit growth in a constrained market
Rated ‘most loved South African homeware brand’ in Nielsen’s survey
Test store to open in Northland Shopping Centre, Melbourne, Australia in Oct 16
23
2016 2015 % change
Retail sales R3 374m R3 187m 5.9%
Comparable sales 3.9% 6.6%
- H1 3.4% 7.5%
- H2 (Q3 3.0%, Q4 6.3%) 4.5% 5.7%
Unit sales 39m 40m (3.1%)
RSP inflation (price 7.2%, mix 2.1%) 9.3% 13.7%
Weighted average space growth (2.8%) 0.7%
Trading density R24 974m-² R22 937m-² 8.9%
Mid LSM target market is constrained in current economic climate
Strongest sales growth was in bathroom & livingroom departments
Opened 6 new stores (ROGA 85%)
Improved GP% & good cost control resulted in double digit operating profit growth
Landscape research highlights improved customer response to product pitch & value
Icon Brand Award: voted winner in the Home & Décor Retail Category
24
2016 2015 % change
Retail sales R1 435m R1 363m 5.3%
Comparable sales 3.9% 0.9%
- H1 3.0% 1.5%
- H2 (Q3 3.4%, Q4 6.3%) 4.7% 0.4%
Unit sales 19m 19m 1.4%
RSP inflation (price 2.8%, mix 1.0%) 3.8% 4.7%
Weighted average space growth 1.1% 2.2%
Trading density R28 263m-² R27 136m-² 4.2%
Strategy
26
GrowthExtend our earnings track record through local & international growth
Building loved brandsBuild strong customer relationships by delivering an ongoing experience to
surprise & delight
OperationsContinually strive for world class methods & systems
PeopleMaintain an energised environment with empowered & motivated people
SustainabilitySubscribe to high ethical standards & sustainable business practices
Constrained trading conditions requires market share growth & places more
emphasis on margins, costs & efficiencies
- scope to increase market share of existing businesses
- prioritise spend & projects to generate profit wedge
Realise benefits arising from
- investments in new distribution centre & merchandise planning system
- more direct & collaborative merchandise resourcing strategy
Improve performance in Miladys (underperforming) & mrpMobile (start up)
Grow credit sales responsibly (NBD <7% book)
- satisfied if credit sales grow at same rate as cash sales
- test in-store integration of mrpMoney
Introduce quality new space of ~4% pa
Improve trading density & profitability by reducing surplus space (50 000m2)
27
Proven model in emerging markets - test developed market (Australia)
- will take time to attract a following & establish our brand
- encouraged by sales conversion rate once shoppers enter our stores
- refine mrp product assortment in line with trading experience gained
- improve supply chain & store operating metrics before scaling
- test of mrpHome planned for Oct 16
Continue to research other markets for
- suitability for ‘exporting’ of mrp brands
- acquisitions, subject to strict criteria
Non-negotiable consistent fashion/value positioning wherever we operate
Minimise risk in Africa during period of uncertainty - awaiting direction from
Central Bank of Nigeria re foreign exchange policy
Drive efficiency in all markets - particularly supply chain, labour & rentals.
Will not enter into USD based store leases without a ‘cap’
Implement duty drawback system to replace bond store
Focus on strong treasury management (cash flow & FX) as we increase
international exposure
28
29
Product
Fashion-led at great value
Differentiated & category dominant private label assortments
Strengthen our value perception & availability of wanted items in a highly promotional
environment
Communication
Convey strong brand personally via multiple touchpoints & channels
Build on sector leading social medial position
- Facebook: top 10 in RSA for number of fans, highest placed retailer
- Instagram: highest number of followers amongst local competitor set
Build a single view of the customer & tailor communication to a personal level
Innovation
Lead with technology to reinforce our brand, improve CRM & visual merchandising,
reduce checkout or delivery times & create a seamless omni-channel experience
Social awareness
Demonstrate commitment to the economy, society & the environment
Beyond just a retail presence
Objectives
Replace our legacy systems, which served us well, with modern integrated planning
(IP), ERP & online systems to support our growth strategy
- gain domestic market share despite competition from international retailers
- international omni-channel expansion
Progress
Steady progress being made on IP & ERP systems. Mitigating risk by
- adopting a phased approach
- minimising business disruption
- avoiding overlap with peak trading periods & transition to new distribution centre
Re-platforming online system in Jul 17
- greater functionality
- significantly lower future costs
30
OBJECTIVES
Increase capacity & consolidate activities
Outgrown existing infrastructure (4 locations)
New 57 000m2 single facility, ability to double in size
Simplify management & improve efficiency
Improve stock management & profitability
Increase throughput to maximise sales
Reduce breakages through better handling of fragiles
Increase level of automation:
- merchandise allocation decisions made closer to final
distribution
- carton sorting quicker & more accurate
- quicker & more accurate unit picking
Replenish mrpHome at inner carton level to reduce store
overstock
Utilise same sorter for inbound & outbound (latter currently
performed by the courier), eliminating cost duplication
Considering receiving stock in bulk and fine picking per
store for more accurate size allocations
PROGRESS
Project on track, building handover in Jun 16
1st division to go live Jun 17, full transition by Sep 17
Cost overlap ~R50m during transition period in FY18
FY19 operating costs expected to be lower than current
(increased for inflation & unit growth)
Future capex of R420m in FY17 & R72m in FY18
Total project cost R1.2bn
Capital Depreciation
value period
Land R166m NIL
Buildings R400m 40 years
IT systems R130m 10 years
Equipment R508m 15 years
31
Support local business
Merchandise made in RSA up 14% to R3.5bn, represents 31% of inputs (SADC 38%)
Founding retail member of Sustainable Cotton Cluster
- in FY16 MRPG purchased 4.2m t-shirts & towels containing RSA cotton
- MRPG committed to procure 2 800 tonnes of cotton from local farmers in FY17.
Would have been double, but for the drought
- cluster targeting to create 7 200 jobs & increase production by ~450% by 2018
Engage with communities
mrpFoundation activities focused on national priorities of education & skills development
- various mrpFoundation school programmes impacted ~65 000 learners in FY16
- Jumpstart retail programme trained >10 000 youth in the last 3 years, resulting in
~4 300 being employed
- Jumpstart manufacturing programme developed 550 people in the last 2 years, of
which 76% were employed
Protect our planet
Reduced carbon foot print on baseline FY13 by 17% (29 500 tonnes CO2 emissions)
Solar energy installed at head office, ongoing opportunity to reduce store consumption
via lighting technology
Achieved waste recycling targets - head office 50%, distribution centres 94%
32
OBJECTIVES
Sustainability
Get closer to point of manufacture
Evaluate suppliers’ performance & compliance with ethical
& social standards
Reduce business risk
Entrench value positioning
Eliminate hidden/duplicated costs to keep input prices low
Mine efficiencies through continuous improvement
Maintain appropriate balance between low cost sourcing &
merchandise quality
Maximise sales
Strengthen ability to react to merchandise opportunities by
shortening lead times
Increase agility through collaboration
Improve on time in full deliveries
PROGRESS
Reduction in mrp ZAR landed inputs as planned:
2016 2015
SADC manufactured 39% 39%
Imported from East 61% 61%
RSA 3rd party in ZAR 21% 42%
Foreign 3rd party & factory direct1 40% 19%
100% 100%
Improved USD input prices softened the impact of a
weaker ZAR:
- 1 access to all bills of material, irrespective of channel
- able to negotiate at a component level & compare
factory prices
Accounting is now more complex, but currency risks are
not new
78% of direct group suppliers are SEDEX members
Strengthening supplier grading system - risk rating &
performance to inform future orders
33
Looking Ahead To FY17
34
Tough trading conditions are expected for rest of the year
Plan to open 40 stores & increase closing space ~4% (~ 3.5% net of reductions)
Expect H1 RSP inflation rate to be in mid-teens
Comparatively well positioned as a cash based fashion value retailer targeting the
mid-upper LSM market. Research shows the largest division, mrp has increased its
contribution of high LSM (8-10) shoppers over the previous year
Opened ~5 700m2 space across all 5 brands in Mall of Africa. Despite a full complement
of local & international retailers, the 2 100m2 mrp store achieved sales which were
double their previous opening day best
Thank You
