Pepkor reports strong trading performance and optimistic outlook for the second half

Pepkor Holdings’ traditional retail businesses delivered a strong trading performance in the six months to March 31, expanding market share, and the group is optimistic about its second-half prospects.

Pepkor reported 18.9% growth in normalised headline earnings a share to 84.3 cents for the period, driven by a consistent retail performance, good growth in fintech, and strict cost control.

“Pepkor remains optimistic about the future despite a challenging macroeconomic environment in South Africa. The group anticipates downward-trending inflation, reduced load shedding, and the two-pot retirement system will provide some relief for consumers,” CEO Peter Erasmus said at the release of interim results on Tuesday.

“Despite the subdued and competitive market, we continued to deliver excellent growth, and we're confident our consistent performance and growth in FinTech will continue to underpin strong performance,” he said. The group is on track to open between 250 and 300 new retail stores in the 2025 financial year.

The growth momentum of the first half had extended into May, where the group saw winter season clothing sales growth versus the same time last year, when it was still relatively hot in May, he said in an online presentation.

Group merchandise sales increased by 10%, with like-for-like sales up by 7.8%. In Southern Africa (excluding PEP Africa and Avenida), like-for-like sales grew by 9.6%. This was supported by improved product availability, healthy growth in retail credit interoperability, and growth in cellular connectivity.

Pep, the group’s largest brand, increased like-for-like sales growth by 10% and above for six consecutive months. Market share was expanded across key product categories, and 43 new stores were opened, bringing the total to 2 649 stores.

Ackermans saw like-for-like sales growth of close to 10%. Market share was gained in key categories, and the store base expanded to 1,018 stores.

In the Speciality division, there were solid performances in Dunns, Refinery, and CODE, with improved trading in Tekkie Town.

The Ayana brand, focused on adult womenswear, was successfully launched across 32 stores. The Speciality store base expanded to 972 stores.

In Lifestyle, the Rochester, Bradlows, Sleepmasters, and Incredible Connection brands saw like-for-like sales growth of 6.3%, outperforming the market in key product categories.

Avenida, Pepkor's operation in Brazil, improved like-for-like sales in the second quarter despite a challenging environment.

The FinTech segment delivered healthy growth. In Connectivity, Pepkor sold 6.8 million cellular handsets, an increase of 17%, and its market share in prepaid handsets rose, now accounting for eight out of every 10 prepaid handsets sold in South Africa.

Smartphone penetration increased as the group made these devices more affordable, with smartphones constituting 65% of handsets sold.

Group market share was indicated by Retail Liaison Committee data that shows that Pepkor accounts for nearly 2 out of every 3 baby wear sales, 1 out of every 2 kids wear sales, more than 3 out of 4 school wear sales, and 8 out of 10 prepaid cellular handset sales. | Visit: www.businessreport.co.za

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