We are not convinced that MRP’s topline growth has turned the corner in 4Q16, and find surprising its inability to capture more market share from consumers trading down.
MRP’s direct sourcing from China has more than doubled over the past year, yet this has not improved GP margins. The direct imports have led to more capital tied up in stock, which we estimate to cost ZAR66m in FY16, and could increase to ZAR106m should MRP achieve its 90% direct sourcing target.
