Pepkor Holdings yesterday reported a 7.7 percent increase in revenue from continuing operations to R20.3 billion for the first quarter to end December, boosted by Pep and Ackermans brands. Picture: Henk Kruger/ANA/African News Agency
Pepkor Holdings yesterday reported a 7.7 percent increase in revenue from continuing operations to R20.3 billion for the first quarter to end December, boosted by Pep and Ackermans brands. Picture: Henk Kruger/ANA/African News Agency

Pepkor lifts first-quarter revenue by 7.7%

By Sandile Mchunu Time of article published Jan 27, 2021

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DURBAN - PEPKOR Holdings yesterday reported a 7.7 percent increase in revenue from continuing operations to R20.3 billion for the first quarter to end December, boosted by Pep and Ackermans brands, which grew sales by 8.9 percent.

The retailer said it grew its revenue in tough operating conditions during the quarter, which included restrictions imposed in South Africa to deal with the second wave of the coronavirus pandemic.

“The development of Covid-19 and the lockdown restrictions continue to weigh on unemployment and consumer spending which contributed to a constrained retail market,” the group said.

In spite of the trading restrictions, Pepkor managed to grow its market share and said, according to the latest Retailers’ Liaison Committee (RLC) data to November, the group expanded its market share by 270 basis points, indicating an acceleration from the 240 basis point gain reported to the end of September. In the clothing and general merchandise brands, the group reported an 8 percent increase in revenue to R14.8bn.

In most of the brands, good sales momentum continued during the quarter, achieving growth on the comparable quarter last year, which excluded any impact from Covid-19.

“Trading was very strong during the first six weeks of the quarter, weakened significantly towards the end of November and normalised in December,” the group said. Pep Africa, which contributes 2.6 percent to group revenue, reported constant currency sales growth of 3.8 percent and 7.3 percent on a like-for-like basis.

However, the group said that currency depreciation had resulted in a sales reduction of 12.7 percent in rand terms.

Its speciality division reported a 10.2 percent increase in sales and gained market share in all brands, with the exception of Shoe City.

Pepkor announced that the process to dispose of John Craig was almost complete.

The group said credit continued to be granted conservatively and collections were in line with pre-Covid-19 levels.

“The Tenacity credit book, which facilitates sales in Ackermans and Speciality, increased to R3.2bn, up from R3bn at the end of September,” the group said.

In the furniture, appliances and electronics segment, revenue was up by 7.5 percent to R3.1bn while the JD Group increased retail sales by 9.3 percent.

The group said this was achieved despite an 11 percent reduction in trading space year-on-year and prudent credit granting, which resulted in the overall JD Group credit sales mix falling to 10.3 percent compared with 17.5 percent for the same quarter last year.

Looking ahead to the second quarter, the group said volatile trading patterns were expected with the second wave of the Covid-19 pandemic and restrictions continuing.

“The delayed start to the academic school year will have a major impact on ‘back-to-school’ sales performance in January, which is expected to shift to February,” the group said.

Pepkor shares closed 3.60percent lower at R14.71 on the JSE yesterday.

BUSINESS REPORT

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