RETAILER Pepkor's revenue grew by a muted 1.3 percent to R22.8 billion in the first quarter to end-December as its business was severely affected by the last year’s civil unrest and revenue of its fintech segment declined nearly 10 percent.
Pepkor - a subsidiary of Steinhoff and the owner of Pep, Incredible Connection and Ackermans - said its revenue growth was impacted by the civil unrest in KwaZulu-Natal and Gauteng, which took place in July.
It said 161 of its looted stores had not been yet reopened at the start of the quarter after the unrest.
“The group has now reopened 450, 82 percent, out of the total 549 stores affected by the civil unrest. The reopening of the remaining 99 stores is delayed by infrastructure and shopping centre rebuilds,” Pepkor said.
The resultant insurance claims process relating to material damage and business interruption was progressing with further payments from the insurers expected during the current financial year, the company said.
Sales performance in its stores, PEP and Ackermans, was affected by negative growth in cellular compared to an extremely strong base in the comparable quarter when handset sales increased by more than 20 percent, Pepkor said.
However, the revenue of Pepkor’s fintech segment declined by 9.9 percent to R2.1bn for the quarter.
“The decline is attributable to the FLASH business where a deliberate change in product composition resulted in income now being recognised as net commission versus full transaction value as determined by International Financial Reporting Standards,” the company said.
However, Pepkor's other fintech business, Capfin, achieved positive revenue growth and its credit book increased to R2bn from R1.9bn a year ago on a gross basis.
“Non-performing loans improved and remain at very healthy levels,” it said.
While trading was weak in October 2021, it normalised in November and strengthened in December.
“The improved trading trajectory is very encouraging in contrast to the challenging operating conditions faced in the wake of a weak economy with record-high levels of unemployment,” it said.
The clothing and general merchandise segment increased revenue by 2 percent to R15.1bn for the quarter.
Pepkor said its furniture appliances and electronics segment delivered strong growth against a high base with revenue growth of 9.7 percent to R3.4bn for the quarter.
The Building company sales dropped by 2.1 percent due to the building materials market rebounding following the impact of the initial Covid-19 wave.
“Although the economic outlook remains challenging, Pepkor has over many years been able to achieve strong results and demonstrate resilience under these conditions. We remain encouraged that the relaxation of Covid-19 restrictions and increased tourism and economic activity will support growth and a reduction in unemployment levels going forward,” the group said.
During the quarter ended December 31, the group opened 102 new stores. The company plans to open more than 300 new stores in the current financial year, and it said its plans remained on track to open these stores.
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