Cape Town - Pepkor, the retail conglomerate, reported yesterday a 22 percent increase in net profit to R292 million in the half-year to December 31, with strong growth from its offshore arm, Brown & Jackson (B&J), offsetting tough domestic trading conditions.
Headline earnings, diluted by additional shares in issue, increased 17 percent to R1,30 a share, while the dividend was lifted to 40c (36c).
Jan le Roux, the chief executive, expected more of the same in the second half. He predicted growth in earnings for the full year to June 30 to match the level of the first six months.
He said the most gratifying aspect of Pepkor's interim results was the strong performance by B&J, whose R200 million net profit was the biggest contribution to Pepkor's bottom line.
"We are also highly satisfied with the results of our Australian chain, Best & Less, whose results were consolidated with Pepkor's for the first time. The chain, which is essentially an Australian version of Ackermans, contributed R32 million to operating profit."
Le Roux said indications were that B&J would make a #2 million loss in the second half. He stressed that the net effect for the full year would still be an #18 million contribution to Pepkor's profit.
He said Pepkor intended growing B&J's 501-strong store base by 20 percent a year.
"We think we can get 1 700 stores open in the UK over the next few years by opening more than 100 stores a year."
Le Roux said Best & Less, which has 88 stores in Australia, would be expanded at a rate of 15 percent a year.
"We want Pepkor to become a cash retailer worldwide with a specific focus on the mass market. But we're not looking for acquisitions in other parts of the world yet, as we have enough expansion capacity in existing businesses."
Turning to local trading, Le Roux said Pep, the cash-based clothing and apparel retailer, came in below budget in the interim period with operating income down by more than half at R43 million.
He said the restructuring at Pep had proved to be a far more radical process than initially expected.
Pepkor firmed 30c to R26,30 yesterday, despite the results coming below the expectations of analysts.