Good morning, everybody, and welcome to the Mr Price Group results presentation. This covers the interim results. It's the six months to the end of September. I think, certainly since we last spoke, we had a session just after our year-end in June, and we also released a trading update towards the back end of July. But I really feel that there's been a lot that's happened since then. But just to recap, when we did speak last, we did say that April and May had started off really slowly. I'll go into the detail around that, that June had improved somewhat, that generally we weren't finding a lot of positives in the retail environment in H1, but we're expecting a much improved H2.
From our perspective, from our management team's perspective, I think that's exactly how it's playing out, and we'll give you some proof of that as well. But I think we've, yeah, when I say we're finding ourselves in a very different position, if you can just put yourselves back in the pre-election jitter phase, when everything was sort of going against the economy, the sector, I think, looking sort of six months and more later, we're finding ourselves, I think, at an inflection point, and certainly things are looking a lot more positive. Some of that's borne out by consumer confidence and business confidence. Business confidence is now at a three-year high, and consumer confidence is at a five-year high.
Then the other thing to remember is that although we've gained market share quite strongly, over the last year or so, a bit longer than that, it is that lower-to-mid-income customer that was hurt the most financially by a constrained environment. So when that inflection point comes, it's obviously that customer set that stands to perform the strongest. So I'll talk a little bit about that, the background in the economy, the matters impacting the consumer. Praneel Nundkumar will go through the performance in a bit more detail. Then I'll get onto value creation a bit later. It's going to be a slightly different slant on it this time, and I'll go into a reason for that, but it's going to be a more condensed presentation on the value creation side.
I think if you look at it globally, there are several risks remaining. It's not totally risk-free. Geopolitical tensions still exist, but I think in South Africa, when you look at just the detail of that slide, you can see some of the things that, although it was a very, very tough H1 and an even tougher Q1, but there's a sense of renewed optimism. There hasn't been load-shedding since March. The election concerns have abated. The rand strengthened from Q1 into Q2, and business confidence I've spoken about, so it's all looking like there's an inflection point that we've arrived at, which is great for our business and great for the retail sector.
If you then just go into the consumer environment in a little bit more detail, obviously overall inflation, when it was running at higher levels between 2022 and 2023, that does impact disposable income. Interest rates being higher for longer certainly chewed into available funds that consumers had, and then you can see the impact, that red line is disposable income, still positive, but it's actually decreased over the time span reflected in this graph, and retail sales showing a more positive trend. It did still end up negative at -0.4%. The group highlights and things that I think are worthy of mentioning and bringing to your attention, things that we're quite proud of, is an improving sales and comp sales trend through H1. I'll give you quite a lot more insight into that.
We're a business that's focused all on profitable market share gains. We're not after market share at all cost. And the fact that we've delivered market share gains and pushed our GPs, it was definitely our intent from the outset. And speaking about that, our gross profit was up 2.1%, and we expanded our GP margin by 110 basis points. We did open 92 stores, and I'm going to talk about the level of investment that we've had throughout the retail cycle, or, in fact, the last couple of years, the downward cycle in retail. And very pleasingly, the momentum that we not only built up in H1, perhaps kicked on into H2. And it's not in one part of the business. It's in all three segments. It's in apparel, it's in homeware, and it's in cellular. I think that's very pleasing.
On this graph, you can see what those black bars reflect Q1, and the white bars reflect Q2. Overall, you can see a slight improvement in Q2 from 4.9% growth to 5.3%. Those combined contributed to the group growing in totality 5.1% for the period. When I was talking about the performance in April I made a little bit earlier, the rebound into June, there you can see the jump from May minus 1.1% to a positive 12.7% really tells the story. There was pent-up demand. People hadn't shopped in April and May, so pent-up demand was certainly there. Winter arrived, and there was a lot of consumer confidence post-elections.
Of course, you know, what tends to happen is that a few months can be often followed by a lag effect in the month that comes after it, and a very strong June went back to 3.5% growth in July, but July itself was a very promotional environment, and we decided not to partake in that, so although it wasn't a high-growth month for us, we still managed to increase our GP percentage, which was, once again, absolutely our intention. Then August, September, nice sort of gradual improvement, sales growth, going in the right direction, still not robust, but certainly heading in the right direction, and once again, market share gains in those two months that grew margins, so the first couple of bars here, H1, Q1, Q2, you can see that improving trend, as I've just spoken to.
But it's the kick-on into the first two months of H2 that I was referring to that is showing such great momentum. And in October, our sales overall was up 11.5%. And in the first two weeks of November, 14.7%. Once again, across all segments of our business, and we've also had GP margin growth. So, when I say across all our businesses, all three sectors delivering double-digit growths for that six-week period. So very pleased with that momentum. It's great having it. We're obviously going to the peak season now, but certainly are setting the scene quite nicely. Overall, the group results, revenue was up 5.2%. I've just explained the retail sales part of that, which makes up the most, the bulk of that. GP at ZAR 6.8 billion was up 8.1%. And then you can trace your way through the EBITDA and operating profit.
Praneel will go into a lot more detail about that. Overall, HEPS was up 7.1%, diluted 6.5%, and our dividend per share we maintained our payout ratio, and our cash reserves of ZAR 2.2 billion. I think we'll put that into perspective when we go through what we've actually spent on CapEx, acquisitions, and dividends over the last few years, in fact, the last five years, and we're still in a cash flush position, so cash reserves up 90%. Overall, I think as a management team, we're going to look at these set of results, and if there were any colors in there that weren't green, then I think we've got a reason not to be satisfied, but we've got to be satisfied in a market that H1 was very, very difficult.
And at the end of the day, we can measure our performance against competitors, and we're coming out on the right side of that equation too. So as a management team, pretty satisfied, really looking forward to an H2 that will give us more opportunity. Okay, I'll now hand over to Praneel, and he'll take us through the detailed performance.
A very warm Durban, good morning to all our stakeholders joining us online on the webcast this morning. I'm pleased to present to you the FY 2025 interim results for the Mr Price Group. While there may be optimism in the market currently in terms of the current and future view of the macroeconomic environment in South Africa and the impact thereon on the consumer, it is important to note that the interim results that I'm about to present to you are set within the context of a very challenging first half, and as you heard from Mark, impacted by pre-election uncertainty in April and May, some currency volatility that played out in the first half, and higher-for-longer interest rates, and some sticky inflation at the beginning of the period that all came together to affect customer affordability and confidence in the first half.
The second important point to recall is that when we met in June to present the year-end results for FY 2024, we presented some medium-term targets to the market. As mentioned there, those targets are annual targets, and we will relook at those benchmarks at the year-end presentation for FY 2025. This is primarily due to the fact that there's a higher weighting of our results to the second half, which encompasses the all-important peak Festive trading period. Moving on to look at the revenue growth for the group. As Mark mentioned, total revenue grew 5.2% to ZAR 17.6 billion in the first half. Retail sales was up 5.1% to ZAR 16.9 billion. Total retail sales split between Q1 and Q2 is listed on the right-hand side of that slide, with 4.9% in Q1 affected by the late onset of winter in April and May.
Then, as you saw in a previous slide, the growth in June of 12.7%, with that momentum carrying on into the Q2 results of growth of 5.3%. Comparable store sales were up 0.4% in the first half. Again, momentum from Q1 of 0.1% into Q2 of 0.7% growth. Other income grew 4.8% to ZAR 636 million. That was driven primarily by the financial services division, where interest and other charges on debtors grew 6%, and premium growth on the Mr Price Insurance business was up 7.3% for the half. Other income was down 11.8% to ZAR 74 million, and this was impacted by insurance interruption claims in the base, which we'll not repeat. Finance income was up 59.4% in the first half to ZAR 91 million, and that's off the higher cash balance that Mark mentioned that we closed the period on, up 90.4% on last year.
Moving on to the group income statement, we just mentioned revenue grew 5.2% and some other stats there. Sales growth in the bricks channel grew 5.1%, and online sales grew 4% over the period. Units grew 2%, and RSP inflation grew 2.7% on last year. Gross profit grew 8.1% to ZAR 6.7 billion, and that was on the increased GP margin of 110 basis points, which I'll talk to you just now about. Expenses grew 9.2% to ZAR 5.2 billion, and I also have a further slide with detail there to talk to you about. That resulted in operating profit growing 4% to ZAR 2 billion in the first half. Net finance expenses decreased 7% to ZAR 313 million, and that was impacted by the increase of interest on lease liabilities, also then offset by the increase in interest income from the higher cash balance.
Profit before tax grew 6.3%, and profit after tax grew 6.5%. Profit attributable to non-controlling interests were down on last year. We have previously noted the material weighting of the Studio 88 performance to the second half. So while the division did make an operating profit for the H1 , amortization of intangible assets raised at acquisition impacted their results. Profit attributable to equity holders of the parent were up 7.3%, and EBITDA was up 5.8% to ZAR 3.5 billion. Taking a look at the segmental performance and starting off with the apparel segment, the apparel segment still comprising 78.7% of total sales and predominantly led through by the Mr Price Apparel division, contributing 43.2% to total retail sales in the apparel segment.
Retail sales in the segment grew 4.9%, but operating profit was down 1.6% on last year, impacted by the results of Studio 88, just in terms of what I mentioned on the previous slide, and the Miladys business, which was impacted by the negative credit cycle in the first half. Home sales grew 0.6%, and units grew 2.9%, with trading density ending just above 37,000 rand per square meter. Moving on to the homeware divisions, the homeware divisions contribute 17.7% of total group retail sales, with the largest slice incorporated from Mr Price Home at 11.8%. Retail sales in this segment grew 4.3%, and very pleasingly, operating profit grew 7.8%, driven by the recovery in GP of 170 basis points in the sector. Comp sales were up 0.1%, and trading density ended just above 29,000 rand per sq m .
Having a look at the telecom segment, the telecom segment contributes 3.6% to total retail sales made up of the Mr Price Cellular and Power Fashion brand concepts, where retail sales grew 13.1%, and we were very satisfied with the operating profit growth of 14.7%. Units were down 14.2%, and inflation was up 37%, but this was due to the mix change from customers moving on from 2G devices into 3G and 4G devices, and from the migration of feature phones into the smartphone space. Turning our attention now in terms of space growth, the group ended the first half on 2,958 stores at the end of the first half, driven by 92 new stores opened in the period.
The apparel segment grew 80 stores, particularly with growth coming through from the Mr Price division and the Mr Price Kids brand, together with increases in store rollouts for Power Fashion and Studio 88 across its five chains. The home segment grew seven stores to close on 594 stores, and the telecom segment grew five standalone stores to close on 46 stores, but 533 store- in- store concepts across Mr Price Cellular and Power Fashion. I'm pleased to report that the new store returns are well above the internal thresholds that we have set and are so far in excess of the company's WACC. We continue to apply stringent capital allocation guidelines and always invest in best-performing chains. Net average weighted space grew 4.9% on last year.
Now moving to the gross profit analysis, group gross profit came in at 90, sorry, the group gross profit came in on 39.7%, up 110 basis points on last year, driven by strong product execution, and more importantly, a clean exit of winter with lower markdowns in the first half compared to last year. The apparel division GP came in at 40.2%, also up 110 basis points on last year, and we were pleased to note that four out of the five divisions grew GP margin on last year, with Power Fashion and Studio 88 also growing more closely aligned to their medium-term targets. From a homeware division perspective, a great recovery for the homeware sector with GP at 42.2%, 170 basis points up on last year.
All divisions within the homeware sector increased their GP margin, and that was really attributable to strategic category extensions and the growth in private label, particularly for Yuppiechef. Telecoms' GP grew to 20.3%, 30 basis points up on last year due to the mix change from devices to higher margin accessories, together with the introduction of some private label products in the telecom sector. Moving on to overhead expenses, depreciation and amortization grew 8.4% on last year. This was driven by the increase in the store base of approximately 209 stores from H1 last year to H1 this year, driving up depreciation on the right-of-use assets. Employment costs grew 5.7% despite the increase in minimum wage and the store growth, which we are quite comfortable with as those were well managed.
Occupancy costs grew 14.4% due to the weighted average space growth of 4.9%, and also increases in utilities, electricity, and water of up to 18.2% for the period. Other operating costs were up 14.5%, but that was really impacted by exchange rate fluctuations on foreign territories, specifically Ghana, Zambia, and Kenya, and when those are stripped out from the growth on operating costs, you get to 8.2% growth on that line. Further, total expenses grew 9.2%, but again, when stripping out exchange rate fluctuations from total expenses, we landed on a 7.9% growth in operating expenses, so while we continue stringent management of overheads, we do anticipate that the second half will result in higher, slightly higher growth in operating expenses than the H1 .
This is in pursuit of the space growth that we spoke about, where we will continue with growing another 108 stores into the H2 , and our performance-based rem model may result in some increased costs in the H2 . However, on a total basis, we do expect to land closer to the medium-term target set of 28% expense-to-sales ratio by the time we get to the second half. Moving on to operating margin, group operating margin came in at 11.4%, down 10 basis points on last year, and as we noted in the FY 2024 results, the H1 margin is typically lower than H2, also impacted by the weaker sales in Q1 that impacted operating leverage.
From an apparel division group perspective, book margin came in at 13, sorry, 11.3%, 70 basis points down on last year, impacted by the higher price point merchandise of Studio 88 and the negative credit cycle for Miladys that we mentioned earlier. Homeware's book margin came in at 9.4%, 30 basis points up on last year, and that came through from the improved gross margin that we spoke about on the GP margin slide. From a telecoms perspective, book margin came in at 10.2%, which is 10 basis points higher than last year. That came through from the growth in private label handsets that we spoke about and higher margin accessories, together with 30 consecutive quarters of market share gains, reaping benefits of increasing scale in the telco sector. Now turning our attention to the balance sheet, gross inventory was up 13.6%, but excluding goods in transit was up 9.5%.
The growth in the inventory balance was really management's response to counter the risk of shipping and port delays that we had noted. It was prudent to build up offers in the inventory planning cycle to be well stocked for the festive season. The shape of the stock, we were quite comfortable as we exited winter cleanly, and stock freshness was up 550 basis points to 86.5%. We were comfortable with an adequate inventory provision of 6% down on the provision last year of 7.9%. When looking at the sell-through of stock into the H1 in October and November, we shared those sales results with you, and we were comfortable that those sales results came through from those divisions who had built up stock by half year.
Trade and other receivables was up 14.9%, and I have a slide just now to talk to you about the credit performance, and trade and other payables was up 20.7%, with the supply chain finance program gaining momentum in H1. Also pleasing to report that our balance sheet remains debt-free and unencumbered at the end of the H1, and the cash and cash equivalent balance closed at ZAR 2.2 billion, 90.4% up on last year, with a cash conversion ratio of 83.7%, 230 basis points upon last year. Moving on to the supply chain finance program, I know we've spoken to you a few times now about the supply chain finance program, and I'm pleased to report that this year we won two international awards from the Working Capital Forum in terms of our working capital program.
We won the Best Use of Supply Chain Finance and a gold award for the Best Use of Working Capital, and this was the first time a company from Africa had received the gold award from the forum. The supply chain finance program was launched in 2021, and thus far we've unlocked up to ZAR 1.5 billion in working capital and converted up to 75% of our supply chain onto the program. This is a really great example of partnership that the group believes in, because not only do we benefit from the working capital perspective, but our suppliers also find great value with the cash flow receipts provided in terms of their participation in the program, supporting their growth as businesses also.
Looking at the cash flow movements in the first half, we started the half with a cash balance of ZAR 2.7 billion, and cash generated from operations was ZAR 3.2 billion. Working capital was down ZAR 287 million on last year. That really came through from the investment in inventory, as we saw the inventory balances were up, and that was slightly offset by the supply chain finance program, where we saw also an increase in the trade payables days. Net interest received was up ZAR 288 million, and tax was an outflow of ZAR 264 million in the first half. We invested ZAR 316 million into investing activities through PPE, and one of the bigger outflows, the dividend payment at ZAR 1.3 billion, approximated the 63% payout ratio that we have done, that we have paid in the prior years.
The acquisition of Studio 88, a new cash outflow for 6% of the minority shares, came in at ZAR 453 million, and our largest outflow was in the repayment of lease liabilities at ZAR 1.5 billion to end the cash balance at the first half at ZAR 2.1 billion, 90.4% up from last year. From an allocation of CapEx perspective, we allocated ZAR 383 million of CapEx in the first half. 70.7% of this went into the store environment for new stores, expansions, revamps, and relocations, and we continued investment into revamps into the first half. We're quite comfortable that the returns of the store portfolio are above our thresholds, as we mentioned, and we are on track to get to the target budgeted CapEx of ZAR 1 billion by the end of the financial year.
Lastly, just taking a look at the credit growth performance, credit sales came in at 2 billion Rand for the H1 , which contributed 11.9% of total sales and grew 2.7% year- on- year. The approval rate ended on 19%, which was marginally up from last year, but based on the constrained consumer environment in the H1 . We have noted that there is an opportunity in terms of the positive trends coming through from the cycle change to increase that approval rate, and early reads in terms of the post-H1 results is that the approval rate is above 20% at the moment. However, any changes in the credit risk strategy will be done in relation to external and internal data sources and how we play out credit decisioning based on customer affordability.
Looking at the debtors' book, the debtors' book grew 16.8% on last year to ZAR 2.8 billion, but remember at year-end in June, we spoke to you about the change in the write-off point. So if you look at the growth to March, which was year-end, the debtors' book only moved 0.1%. From a net bad debt percentage perspective, the net bad debt came in at 1%, again, non-comp to last year's 10% net bad debt, which was on the old policy, but more comparable to the March number at 2%, and that's really based on the rolling 12-month effect of the net bad debt write-off policy change. We do expect by the end of the financial year that the net bad debt percentage will align with the historical norms and come back into the range of 7%-8%.
The impairment provision came in at 13%, up on last year's 10.5% due to the policy change on the write-off point, but slightly lower than year-end at 13.9%. Thanks for your attention. I now hand you over to Mark, who will talk to you about the strategy process and outlook for the rest of the financial year.
Thanks, Praneel. I think before I get onto that, just in summary then, I think, you know, in a very constrained consumer environment, I think the sector was struggling for top-line growth. I think we were very pleased with the GP performance that we put in, but I guess because of the top-line being constrained, inflation for the period probably averaging close to 5%, space growth being close to 5% means that your expenditure was always going to be slightly higher than inflation.
I think in that scenario, to deliver 7% HEPS growth, when I think we had done a good job of not only explaining Q1 performance to the market, but also then positioning Q2 and our expectations there, I think it was, as I said, on reflection, a job reasonably well done. When I look at value creation and just going on to that section now, this is where I'm going to cut back a lot. The primary reason for that is many of you would have attended the Capital Markets Day in September. In fact, it was the better part of two days we spent with you, and we went through, obviously, all the group thinking, but certainly all the divisional thinking as well.
I think most of that you did attend either physically or online, certainly in the response that you can see there that we did get back, I think was an extremely beneficial day. That you didn't only have access to myself and Praneel presenting and engaging, you also had the benefit of our executive committee and all our managing directors present that interacted and shared their thoughts too. Certainly, a lot of it was around strategic intent, unlocking all the value as the economy turns, and I think that's exactly the position that we're in now, turning economy. I'm not going to go through all these pages in detail, but this is some of the stuff that we did cover and some of the stuff you would have seen already.
Talking about investing through the cycle, you'll recall previous conversations that we've had about making sure that we diversified our customer base. And we did that, and in the last couple of years, we've acquired three businesses, and we had two organic launches, which were cellular and kids. So quite a lot of activity in that, and certainly, I think that investment through the cycle is one of the things that really set us up well for going into H2 and the better cycle. So when I talk about investing through the cycle, you remember also that we, in fact, didn't stop store openings. We had a balance sheet that supported ongoing investment through the difficult times, and in fact, on the graph on the left there, you can see we actually ramped up investment.
So the store openings did increase, but of course, don't lose sight of that this was a much bigger business, and also with three divisions that were new to the stable, they would add to those store openings as well. Praneel did talk about the expectation for H2 this year, opening another 108 stores or thereabouts to take us to about 200 stores this year. But I think the real story is the graph on the right-hand side. That over the last five years, we've invested in a very difficult retail environment. We've kept that investment flowing. We spent almost 10 billion Rand in CapEx and in acquisitions, and at the same time, didn't touch our dividends in terms of adjusting any payout ratio, and also paid 8.6 billion Rand out to our shareholders in dividends.
So I think to have done that in a cycle that's been hardly robust for retailers, to have returned shareholders the funds that we have, and to have still ended debt-free and with resources of ZAR 2.2 billion, that really sets us up nicely for the future. All that investment through the cycle, just want to reiterate on this page, it's not all about store openings, it's not all about acquisitions. We've got the inherent health of the business that comes first, actually, and there you can see across the top all the other things that we've invested in simultaneously. Our people, our merchandise processes, tech area, and supply chain and logistics. Speaking of which, one of the things that we did do in the last couple of years, it was more risk mitigation than anything else. We did take an additional site in Gosforth Park in Johannesburg.
That was 30,000 sq m. But as we go into the next two years, we'll probably spend the better part of ZAR 500 million making sure that that Gosforth Park site is a really fully functional and operating distribution center for us. So it will feature all our current warehouse management processes, automation, etc. And the intent there is to take a bit of heat out of the Hammarsdale area and certainly service the northern areas from that location. Of course, when you are investing to the extent that you have, as I said, it's not all about external investments and acquisitions. Our inherent brand strength is all important to us. And time and time again, it's not us saying this, it's our customers saying it.
We are the most shopped apparel and homeware retail in South Africa, and we continue to be so, and we enjoy the highest brand equity in the apparel and homeware sectors as well. Of course, there's a lot that goes behind that into achieving those outcomes. Store revamps, our digital marketing and marketing presence, a sought-after omnichannel experience. And don't forget, our customers want to browse online, but mostly shop in store. That's their customer and that's their behavior. And just really looking at customer focus at every touchpoint. As much as I can look back and be satisfied with what we've done in this area, I still think we've got a lot of work to do. Certainly on the last thing, the customer focus at touchpoints and certainly expanding store revamps, because I think we're only really scratching the surface at this point.
So all that will be inculcated in our longer-term thinking. We won't discuss this capital allocation framework either. You know that, and we've spoken about it before. The things that we look at for acquisitions, the considerations that go into our decision-making with organic considerations, and I'm just restating those for your benefit. And you've also seen this before. This is our strategy framework that you can see the six pillars at the bottom. Then in terms of the strategic outcomes, the thing that I do want to just spend a bit of time on today is talking through the profitable market share. That's driven by growing comp sales, by space growth, category extensions, and obviously having brands that appeal to consumers. That means delivering excellent fashion value every day to them.
So when I look at these all group stats now, and if you just look at that left-hand side of the graph, you'll remember the challenges that we had some time ago. We weren't achieving the top line if we wanted to. We did have internal distraction through our ERP implementation that's been bedded down for some time now, and we were going through a phase of we didn't have backup power when load-shedding was all at its peak. And that reflected in obviously our sales growth. You can see the Mr Price Group red line, that's the sales growth that we had. In fact, it was flat for that Q1 last year period, and that period we did lose market share. I did say at the time, we are very, very confident of our brands and of regaining that market share.
That loss was really up to those two things that caused disruption internally. And hopefully that message landed at the time, but I guess with the passage of time, it's actually proved that I think our messaging to the market was very clear on that front. Since then, our sales growth for the group has outstripped the market. You can see the gray line, and that's the market. And as we were discussing a little bit earlier, in H1, 60 basis points of market share gains, and that's continued. The RLC just came out from October, and so it's the first month in H2, and we're up 60 basis points as a group there too. So when you're looking at RLC, and don't forget, RLC doesn't include Mr Price Sport, it doesn't include Studio 88.
Or you're looking at Stats SA, which includes all our businesses. We've gained share on both of those fronts, 60 basis points and 70 basis points. Now looking at the apparel segment, and that's pretty much an echo of what's happened at the group level, - 70 in terms of market share to start off with, but we've been through some really strong months of market share gains. In some cases, Q3, as you can see there last year, 150 basis points, and Q1 this year, up 100 basis points. So that all talks to, I think, a good trajectory, good momentum. Certainly, the things that we're carrying into H2 is making sure the execution of our value offer and all our merchandise disciplines continues. Praneel said we have executed very well. That's manifest in the GP percentages that we've achieved, and we've really got well-embedded processes and disciplines there.
Of course, when you're looking at market share, there's always areas that you're under indexed in, and we've got plans to take advantage of that. Looking into H2, we spoke about the store growth opportunities, and those are really across most businesses, and the improvement that we are focusing on in terms of the touchpoints and omnichannel. So really pleased overall that momentum's carried on into the new financial period as well. The homeware segment's a slightly different story. We have spoken at length previously about just the extent of market share that we had at the time really with Sheet Street and Mr Price Home. And we've spoken about the attraction to that market of a whole bunch of other doors that have opened and homeware chains that have expanded.
So I think just start at Q1 there. You can see the difference in our sales growth between Mr Price, our homeware sector, and the market where we started off lagging by quite some way. And it just casts your eye to the right-hand side of that, and you can see how those doors have closed. So although it wasn't a positive market share gain story this year, this period, we certainly have shortened the gap very considerably. But the absolute key thing for me is that despite that and despite quite a constrained top line, we've actually grown profits nicely in that sector.
And after all that, that's what it is about. Looking at the broader economic outlook going forward, I think, globally, those uncertainties that we mentioned at the beginning of this presentation certainly still persist. And we'll have to see what the outcome in time is of the U.S. elections and the Trump win and how that affects Africa, South Africa exchange rates and the like.
But certainly, the positive story is the change in cycle of our core market, more than 90% of our sales, obviously more than 90% of our profits. And that all starts to do with that formation of the Government of National Unity, the level of transparency that we're seeing, a lot of business and government collaboration that we're seeing. That's all positive. Load-shedding hopefully is out of the system. It's been that way for some time. The unemployment rate decreased in Q3. We've seen 294,000 more people employed in the last update. And something that we've obviously very pleased about is that the playing field relative to the international e-commerce players has now been leveled and full duties and VAT applied to those players with effect from the 1st of November. So we're very happy about that.
As you know, South Africa just received a ratings upgrade from stable to positive, and there could be the possibility of further improvements or upgrades in time. All this translates to an economic growth forecast, let's just call it, of around 2%, maybe 1.5%-2%. I also think that the feeling out there is if South Africa can execute and we can collaborate and get the show on the road, then that 2% may in time look a bit soft. It's hardly strong, but it's strong relative to where we've come from and certainly moving in the right direction. That was the overall economy. I think the real positive story is the consumer. Then just don't forget what I said a little bit earlier about that lower to mid-consumer being very hard hit in that downward economic cycle.
So certainly enter a more positive phase. SARS did release some statistics the other day. ZAR 35 billion has been paid out so far in the Two-Pot retirement reform process where individuals can access retirement savings. So I think what's really happened is that there's obviously been an influx of cash in the short term. It is an annual event, but I think looking into next year, it'll probably be more measured and more equal distribution over the year. I did say that consumer confidence has reached a five-year high. Vehicle passenger sales are the high since October 2019. So that's all really looking positive. And of course, a fuel price decrease, in fact, five consecutive months, not just the fuel price itself, it's the knock-on effect that that's got on the economy that will also probably be one of those factors leading to inflation coming down.
As you've seen, the interest rate cycle's changed. We are expecting a 25 basis point cut today. Announcements due after 3:30 P.M. Whether the reduction in inflation leads to a stronger cut than that, I think we'll just have to wait and see. The feeling is that they'll probably go cautious or be cautious and have a 25 basis point cut today. The expectation is then another 50 basis points by our financial year end of March and 125 basis points in our next financial year to March 2026. There on the right-hand side, you can see the moderation in inflation. It was within range at the end of H1. So that's a 3%-6% range that the Reserve Bank had put down. And a bit surprised in October came in at 2.8%, which is lower than expectation. Certainly welcome.
Let's say that we traded really well after our half-year close. October up 11.5%. In the first two weeks of November, 14.7%, and across all our segments. Just for a little bit more insight, quite pleasing that our biggest division, Mr Price Apparel, is growing really strongly, but in terms of the top four performers, the other three are our acquisitions, so that also all goes really well, but we just have to look back at, I guess, the decisions we made regarding our stock decisions at the end of September and what we had initially signaled in terms of the market and an expectation of an improvement in H2, and I think on reflection, those calls were pretty well considered. Praneel did say that the divisions that did have the highest stock growth are the ones performing better, which obviously de-risks that whole stock position as well.
So overall, very happy with that. We're still going to be guided by our strategic thinking. So in terms of store rollouts, we've spoken about those. Those will continue not only in H2 but beyond. We're very focused on the continued excellence of our organic concepts and really pleased with the way Kids and Mr Price Cellular are performing, gaining market share. And Kids, as an example, in October grew 15% versus the market in Kids where that was flat. So excellent performance there. Comp sales is a big focus of ours. Maintaining momentum in profitable market share gains is a big focus of ours. And obviously, ongoing, it's very selective integration of our acquisitions into the main business. But the business is very focused on achieving the objectives that we did set for the year. Praneel spoke about those medium-term targets.
It's very difficult to measure how we're sort of progressing at half-year, but you'll get a very accurate picture. At the full year, obviously, the metrics and those targets are forefront in our thinking too. Just in terms of strategy and the vision and the longer-term thinking, and this is also on the back of our previous communication that we had bolstered our senior leadership team in the group by appointing group retail directors. So that really allows me to, I guess, start balancing my time a lot more on the long-term thinking of the business whilst making sure that the business isn't distracted because we've got people looking at the day-to-day operations. So I think that's working very well. But in addition to that, we have had a strategy function that's been in place for some time now, a very capable function, I might add.
What that has done is allowed me to then split my time a lot more effectively and to be applying it to the long term of making sure there's no distraction, so obviously, after then closing the Studio 88 acquisition, the focus was on extracting value from those acquisitions, scaling our organic opportunities that I've just spoken about, but as soon as that was done, then that was really into the longer-term thinking, and by that, I mean really doing some deep work and looking at opportunities that are going to move the needle for us that aren't going to be lots of small things. They're going to be quite meaningful in their own right with really good prospects, and we spent a lot of time devoted to that whole process, and we've got our guiding principles that we've spoken to you about. We've recalibrated our investment criteria.
And really, it is about that. And I'm really pleased with the focus that we've brought to that and very pleased with the amazing progress that we've actually made in identifying those next opportunities that will take us to the next phase of our growth and lead to us closing those steps to our vision as well. That's it from me. I'm happy to then take questions. Thanks, everyone.
Good morning, everybody. And thank you very much for your questions that I've gotten.
Try and deal with as many as we can in the time that we have. If we can't get to questions, we will come back to you on email or with some follow-up sessions with myself after the presentation today. Just starting with questions on trade post the half-year period and just some comments around the impact of the Two-Pot system and the interest rate cuts and the correlation with that and trade.
Yeah. Thanks, Matt. Look, it's very difficult to assess right now, to be quite honest. The stock calls that we had made at September were more around supply chain disruption, bringing stock in early. But of course, there was this understanding that Two-Pot would have an influence, but we were uncertain as to how big that influence would be. So it might have impacted the timing of the stock that we brought in, but we certainly didn't buy up for the impact of Two-Pot. We've got a lot of stock, and we could certainly manage it within those stock levels. We're going to have to just track the information that comes out from SARS about people that are accessing it, whether it's a balloon now, how long that balloon will carry on for, whether it's sustainable.
Because right now, if it was one thing in isolation and that was Two-Pot, then I think we'd have a very clear read. But we've got this dramatic change in consumer and business confidence. We've got interest rates and fuel and everything going in the right direction. And when consumers are, I suppose, feeling that there is this inflection point, the real negative news in South Africa is behind us. Elections are settled down. The economy is starting to point in the right direction. But very importantly, the finances are going to be in a better place. We're not sure yet at this point how the consumer confidence is translating into spend. But I think let's festive play out, and let's probably Q1 of next year's play out, and then I think we'll have an excellent read.
Thanks, Mark. Just sticking with post-half-year performance, can you expand on the sales performance of Studio 88, especially the post-period trend in contrast to H1? There've been quite a few questions on this, just talking about trading dynamics relating to Studio's business.
Yeah. First of all, we have said on a few occasions now that the seasonality of that business, the earnings are very materially weighted to the second half. But Studio 88 didn't escape the negative trading environment that the other businesses had. And as a half-price point business, still focusing on more value customer, then when things are really, really tough as they were in H1 for the sector in general, well, they're not immune to that at all. But I think for me, the really important thing is that when we spoke about the growth after September, Studio 88 is actually one of our best performers over the six-week period. So really performing strongly, and it's also got GP gains. So really looking good.
Great. Thanks. Question for Praneel. Just to talk about the outlook for operating expenses in the second half, should we see them as similar to H1 or higher? And just a comment about how do we think about operating leverage in the business as sales increase in the second half?
Yeah. Thanks for that question. So as we mentioned when I got to the overhead slide, we are expecting expenses in the second half to be slightly ahead of the first half expense growth. Trust me, this is my number one focus for the second half. The information I gave you when we spoke to the slide was that our expectation is by the second half, even though the growth will be higher, we are anticipating to get back into the medium-term target range of expense to sales of about 28%, just around 28%. So that definitely is a big area of focus for mine. But we also noted that we've got quite an ambitious store growth expectation for the second half, another 108 stores to come through.
Obviously, that weighted average space growth will drive up costs into the second half, but definitely a big focus area for me. In terms of operating leverage and op margin, I think two pieces maybe to pull together. When I spoke to the GP margin for the apparel sector, it was 110 basis points higher than last year. The op margin was down on last year. With the narrative around that, we spoke to the credit cycle being negative, impacting the Miladys business, really challenging op margin growth in the Milady space. She's an older customer. She's more conservative. When the credit cycle is challenging, she's not going to spend like she did in the past. We are anticipating with the change in the economic cycle coming that our credit posture also will take into account the upswing.
I spoke about the approval rate slightly improving, and that's something we'll continue to monitor based on our data endpoints. So we are expecting some expansion in the second half coming through on margin.
Thanks, Praneel. While we have you, please can you expand on comments on the improving credit approval? How much of this is a function of the improving quality of credit applications versus your own easing risk tolerance given the macro environment?
Yeah. I think that's quite an important one because we've said we're a predominantly cash-based retailer, so credit isn't a big focus for us. But having said that, we do have a very, I'd say, matured credit decisioning cycle. And a big part of that for us as an input is really customer affordability. And where we've seen demand for credit being quite high in the first half and into the second half also, the first-half appetite that we had put down was quite conservative just based on the macroeconomic environment at that stage. So in terms of the second half, the data points we look at is the aging of the book. We look at TransUnion customer data and confidence, the confidence index.
What we can see is that post H1, we are seeing that the aging profile of the book is healthy, more or less in line with our historic norms, no significant movement on the current aging. We've also seen some positive signs on first invoice defaulters, which is down on last year. All positive signs in terms of how we manage credit into the second half, and that approval rate that I spoke about, that's ticking up a little bit. We'll continue to monitor how those customers perform as easing comes through into the second half.
Thanks. Just a question over to Mark. Do you think that a de minimis rule on customs duties on imports is impacting Shein and hence helping growth?
Very difficult to say. It only changed on 1 November. So whether the uptick that we've seen in e-com double-digit growth in November is more relative to a lot of the other factors that we've just spoken about, or whether it's because of the changes to VAT and import duty, I think remains to be seen. Just anecdotally, I've seen a lot of comments on social media about customers being impacted by these changes in duties, and it's creating quite a negative area for commentary relative to the purchase prices that they're seeing from particularly Shein and Temu. So I think let that play out as well. I think it's only going to be good for the rest of the retail sector.
With the price increase that it is now getting, I think consumers are potentially going to be thinking twice about shopping those platforms to the extent they have in the past.
Thanks. A couple of balance sheet questions. I think that we've answered the question relating to inventory balances and the clearances that we're seeing post H1. But please, can you speak to the payables cash release? Is that a function of the supply chain finance arrangements? And are these extended payable gains sustainable? Praneel?
For that, yes. So the movement in the payables balance is predominantly due to the supply chain finance program. As I mentioned, we've been on this program since 2021, and we've seen incremental gain over the period up until now. We have converted, we said, about 75% of our supply base. So there is still a portion of creditors that still need to be converted onto the program. So we do anticipate there to continue to be focus placed on it. But I must bring this back with those awards that I mentioned that we had won internationally. In terms of the maturity of our program, it's right up there with some of the best internationally.
I think when you look at the metrics that we track on this program, the reason you're seeing such a positive swing on the creditors' movement from a net working capital perspective is because of how that program is structured. We're quite comfortable that we've got coverage of about 75%. There's still an opportunity there to convert the rest, and that project will continue into the next year.
Okay. Great. Question just back to Mark. How has MRP's relative price positioning to peers changed year- on- year and since March as promotional activity has somewhat normalized in the broader market? Has this somewhat assisted along with revamping stores and getting consumers back into stores?
No. I don't think it's the revamps. We have spent a bit on revamps, but I'd say it's probably an area we could spend a lot more. So I think it's just really the execution of the product and the price point. And inflation's been quite low, I think. So that really puts us well. So if you look at the positioning, not only the fashion positioning, the value positioning, I think it's been as strong as it's ever been. So I think just the collective execution and the improving consumer position are two things that will set us up very nicely for H2.
Okay. A couple of questions just on supply chain disruption. Is there any stock coming through Maputo as a result of Durban Port challenges and therefore any impact due to disruptions in Mozambique and just general comments around disruption in supply chain and the Durban Port?
Yeah. It's something that I think retailers are generally been grappling with and generally made a plan, so what you'll probably see is a lot of the other two retailers also talking about making sure that you bring things forward. Of course, we always evaluate what to source locally and what to bring in from offshore, and it doesn't just deal with lead times. There's quality. There's the execution of certain product types that can't be done locally, and there's pricing and all that kind of stuff. Unfortunately, there hasn't been a lot of, I would say, progress on the disruption side internationally. We did look into Maputo. Really, it's not a port that's geared up for container transport, so we're not using that at all, so therefore, the disruption that you have seen in that market is not affecting our supply chain at all.
Great. Thank you. And thank you very much for the questions. There have been a number of similar questions around the same themes. So we have to try to answer those as best as we can. But as I said earlier, I will deal with questions either through email or with any follow-up sessions should anybody need. We have come to the end of our time. And thank you very much for joining us today.