Mr Price Group Ltd (JSE: MRP) has experienced a surge in its share performance, closing the previous week 11.3% higher after a better-than-expected Q3 sales report. Year-to-date, the stock is up over 10%, reaching a 52-week high. The Q3 performance showcased a 9.9% increase in retail sales, outpacing the total market growth of 3.4%. The Apparel segment, including the flagship Mr Price Apparel division, stood out with an 11.7% growth, contributing significantly to retail sales. The company’s acquisitions, Power Fashion and Studio 88, also outperformed the market, with Power Fashion achieving its highest market share on record.
Despite a challenging consumer environment and potential supply chain risks, Mr Price Group remains robust. The group’s focus on profitable market share gains, strategic acquisitions, and effective inflation management, keeping retail selling price inflation below the Consumer Price Index (CPI), underlines its resilience. With 85 new stores added, the company expanded its footprint, and cash sales, representing 90.4% of total retail sales, increased by 10.5%. Mr Price Group’s commitment to a robust credit policy saw credit sales growing by 4.6%.
Technical
On the 1-day chart, Mr Price Group’s current price is at 17,202 cents, slightly lower after reaching a 52-week high. The stock trades above the upward-sloping 50-SMA (blue line), 100-SMA (orange line), and 200-SMA (red line), indicating a bullish trend. However, the RSI at 72.96, in the overbought territory, suggests caution.
With the price action recently gapping higher and the RSI entering the overbought territory, a potential for gap filling could exist, which could offer short-term trading opportunities towards the 23.60% Fibonacci retracement level (16,407 cents). A break below the initial support would leave the 38.20% Fibonacci retracement level (15,670 cents) and 50.00% Fibonacci retracement level (15,075 cents) as the next significant levels lower.
However, the 52-week high (17,599 cents) would remain firmly in play should the 23.60% Fibonacci retracement level hold. A break above the multi-week high on significant volume could confirm the bullish momentum, leaving the 18,160 cents and 18,809 cents price levels as the next levels of significance in the short term.
Summary
Mr Price Group’s strong fundamentals, coupled with a technically favourable chart, paint a bullish outlook. The potential for short-term profit-taking shouldn’t overshadow the company’s robust growth trajectory and market share gains.
Technically, the stock could experience a pullback due to overbought conditions, but a break above the 52-week high would solidify the bullish trend.
Sources: TradingView, Trading Economics, Reuters, Dow Jones Newswire.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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