Pepkor increases network footprint

By Sandile Mchunu Time of article published13m ago

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DURBAN – JSE-listed Pepkor is confident about gaining a significant market after the retailer opened 145 new stores across its brands, and increased its retail footprint to 5 498 stores in its network.

Pepkor, a subsidiary of Steinhoff International, the owner of brands such as Pep Stores and Ackermans, grew its market share in clothing, footwear and homeware by 90 base points against the backdrop of a restricted total retail market in the six months to end March, it said on Wednesday. 

The clothing and general merchandise segment, which includes Pep, Ackermans, Pep Africa and Speciality Stores, contributed 64.8 percent to group revenue. 

The segment increased its revenue by 5.4 percent to R24.3 billion and operating profit increased by 1.3 percent to R3.1bn, impacted by lower profitability levels in Pep Africa and Speciality.

Chief executive Leon Lourens said despite the lockdown and resultant economic impact, Pepkor was positive about the future and confident that they could gain significant market share. “Our defensive market position and our business model may prove to be quite resilient in the post-Covid-19 environment. Consumers will need the affordability of prices in the discount and value segments of the retail market, and that is exactly what we provide,” he said.

Lourens said a large part of our range included basic and replenishment products with a big focus on babies and kids and, therefore, Pepkor was less exposed to fashion risk and the resultant markdowns. 

“The fact that the group operates at the lowest cost of doing business in the market also adds to the resilience of the business model,” he said. 

In the overall results, the group reported a 6.5 percent increase in revenue to R37.6bn, despite an estimated hit of R476 million as a result of the Covid-19 pandemic on its business. 

Its operating profit before capital items increased by 17.2 percent to R4bn, despite losing R150m as a result of the outbreak. Headline earnings per share (Heps) decreased by 13.6 percent to 44.3 cents a share while basic earnings per share (Eps) decreased by 17.7 percent to 42.1c, as a result of the implementation of the new accounting standard IFRS 16 on leases.

Pepkor said this had a material impact and reduced earnings from continued operations by R200m and negatively impacted headline earnings per share by 10.2 percent.

The group reported a net debt of R14.1bn at the end of the period, slightly up from R13.9bn compared to last year. Pepkor did not declare a dividend and opted to preserve liquidity to deal with the uncertainty. 

Pepkor shares were up 3.21 percent a share closing at R11.27 on the JSE on Wednesday.


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