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* Diluted headline EPS at 232 cents vs 173 cents
* Sales up 14 percent at 6 billion rand
* Shares down 1 percent (Adds details, shares)
JOHANNESBURG, Nov 14 (Reuters) - South Africa's third-largest clothes retailer by value, Mr Price, booked a 34 percent jump in first-half profit on Wednesday helped by a lower tax bill and debt-fuelled consumer spending, but expects a tough business environment in 2013.
Mr Price, which caters to lower income shoppers in Africa's top economy, said diluted headline earnings per share totalled 232 cents in the six months to end-September, compared with 173 a year earlier.
Headline EPS, the primary profit gauge in South Africa, strips out certain one-off items.
Sales increased 14 percent to 6 billion rand ($684 million), helped partly by price increases and new stores, which added nearly 4 percent to its trading space. Same-store sales increased by 8.5 percent.
The Cape Town-based company said it expects trading conditions to remain challenging in the short term as consumers battle high personal debt levels.
Shares in Mr Price fell 1 percent to 142 rand by 1238 GMT, lagging behind a flat benchmark JSE Top-40 index.
"Mr Price is a great company and has done very well over the years but we think the share price valuation is based on unrealistic expectations," said Warwick Lucas, an analyst at Imara SP Reid.
Mr Price and other domestic retailers are among the top performers on the bourse this year as investors bet on continued consumer spending thanks to above-inflation wage increases, cheap borrowing and government grants.
The company, which joined the fund-tracked Top-40 index in September, is up nearly 80 percent so far this year, outperforming a near 20 percent rise on the key index.
But a surge in unsecured loans have prompted some analysts to warn of a credit bubble, saying retail stocks are priced for more than they can deliver.
Unsecured lending, which does not require collateral, rose 21 percent in the year to June, pushing household debt to nearly 80 percent of disposable income.
Separately, food retailer Spar Group reported a 10.6 percent rise in full-year profit but warned of tough competition in the market where Wal-Mart's South African unit Massmart is looking for a bigger share. ($1 = 8.7701 South African rand) (Reporting by Tiisetso Motsoeneng; Editing by Jon Herskovitz)