South Africa's Mr Price posts drop in Q3 sales on clothing mark downs

JOHANNESBURG (Reuters) - South Africa's Mr Price reported lower third-quarter sales on Tuesday, as weak economic growth and tough competition forced the no-frills retailer to sell its clothing at lower prices. Clothing retailers in Africa's most advanced economy have in recent weeks reported mostly disappointing sales and warned profits will be lower as cash-strapped consumers spent cautiously over the festive season. Mr Price, which in November posted its first profit drop in 15 years, reported total retail sales of 6.1 billion rand ($452 million) for the three months to end-December, 0.5 percent lower than the corresponding period in 2015. "The difficult trading environment has extended into the second half of the year," the retailer, which also sells homeware and sporting goods, said in a statement. Weak economic growth and low consumer confidence contributed to strong competition between retailers, who in turn lowered prices and sold goods on promotion, the firm said. Other South African clothing retailers Woolworths Holdings and Truworths International last week flagged a drop in half-year profit. Sales by the Mr Price's clothing division was down 1.9 percent and 4.1 percent lower when measured against comparable stores. "The weak sales performances reflect an apparel market that is challenged by a combination of new competition, discounting of excessive stock and a cautious consumer," said Kagiso Asset Management associate portfolio manager Simon Anderssen. Shares in Mr Price were down 3.8 percent to 157.60 rand by 0954 GMT, the worst performer on the JSE's benchmark Top-40 index, which had declined 0.5 percent. The costs of most clothing retailers are growing quicker than sales, said Anderssen. "We expect this to result in low, and in some cases negative, earnings growth when the companies report over the coming months," he said. ($1 = 13.4780 rand) (Reporting by TJ Strydom; Editing by Ed Stoddard)