Staff Writer
South African retail giant Mr Price Group has warned that renewed global geopolitical tensions and rising inflationary pressures could weigh on consumer spending through the remainder of 2026 and into 2027, despite signs of economic recovery earlier this year.
In its latest financial results, the retailer said global geopolitical tensions remained elevated throughout most of 2025, driven by ongoing regional conflicts, fragile diplomatic relations and the trade war initiated by the United States.
However, inflation remained relatively contained, and a global interest rate-cutting cycle provided some relief to consumers.
South Africa’s economy showed modest improvement during the period, with gross domestic product (GDP) growth reaching 1.1%.
The company noted that real wage growth and disposable income returned to positive territory by the end of 2025, creating a more optimistic outlook for consumers at the start of 2026.
That outlook was disrupted by the escalation of the US-Iran conflict in late February 2026, which placed pressure on global oil supplies and caused oil prices to surge by 38.3% during the first quarter of 2026 compared with the final quarter of 2025.
Mr Price Group said higher oil prices have renewed inflationary pressures on food and fuel costs, while also contributing to a reversal in the global interest rate-cutting cycle.
The company warned that disruptions to global supply chains and higher shipping costs are expected to increase business input costs, with these challenges potentially persisting into 2027 if geopolitical tensions are not resolved.
Despite the uncertain operating environment, the retailer said its priority for the 2027 financial year will be to sustain the consistent earnings growth achieved over the past three years.
Management said the group’s value-focused business model has enabled it to maintain operating leverage despite constrained sales growth.
The group plans to invest R1.1 billion in capital expenditure in South Africa during FY2027.
The investment will fund approximately 180 new stores, store revamps, supply chain enhancements and technology upgrades.
The company said balance sheet and treasury management will also receive increased attention following the introduction of structural debt.
In Europe, the group’s subsidiary, NKD, is expected to invest €24 million, including the opening of approximately 150 new stores.
Mr Price Group reported that trading conditions were difficult in April following the financial year-end, as consumer confidence weakened in response to the unexpected rise in inflation linked to the US-Iran conflict. However, trading improved during May and early June.
For the year under review, group retail sales increased by 4.3% to R41.1 billion, while comparable store sales grew by 1.1%. Other revenue declined by 1.9% to R1.3 billion, mainly due to lower interest rates affecting debtors’ interest income.
Store sales rose by 4.4%, while online sales increased by 4.9%. The company said customers continued to embrace its omni-channel shopping model, with more than 55% of online orders collected in stores.
During the year, Mr Price Group opened 196 new stores across its 15 trading chains, bringing its total store footprint to 3,182 stores.
Trading space expanded by 3.6% on a weighted average basis, with the company reporting healthy returns from new stores as consumers continue to favour in-store shopping.
