JOHANNESBURG – South African discount clothing retailer Mr Price (MPCJ.J: Quote) booked a 10.4 percent rise in third-quarter sales as lower interest rates and tentative economic growth encouraged consumers to spend more.
Mr Price, which runs stores of the same name, said on Thursday comparable sales for the third quarter to end-December rose by 7.9 percent.
The company said strong collections from debtors resulted in bad debt levels showing further improvement from first-half results to end-September.
Mr Price’s mainstay apparel unit boosted sales by 10.3 percent while its its household goods units registered a 10.9 percent rise in turnover after raising prices by 2.9 percent and opened stores that added 4.4 percent of trading space.
Mr Price shares have surged more than 80 percent in the past year, highlighting investors’ hopes that decades-low interest rates and gradual economic recovery will encourage consumers to spend more freely.
The South African Reserve Bank has lowered rates by 650 basis points between December 2008 and November last year.
But some retailers in Africa’s biggest economy have been wary in their 2011 demand outlook, citing high household debt and job losses a building boom ahead of South Africa’s hosting of the soccer World Cup last year winds down.
Growth in South Africa’s retail sales was largely steady year-on-year in October compared with September, but should quicken in coming months as past interest rate cuts filter in to support demand.