Pepkor's revenue takes hit of R476m due to Covid-19 disruption
DURBAN - JSE-listed Pepkor Holdings, a subsidiary of Steinhoff International, said on Wednesday that its revenue took an estimated hit of R476 millionas a result of the Covid-19 disruption its business in the six months to end March.
Despite the knock the group still managed to report a revenue growth of 6.5 percent to R37.6 billion in the backdrop of a challenging local retail environment, worsened by the national lockdown, which impacted trading towards the end of March.
Chief executive Leon Lourens said in dealing with the pandemic the group prioritised the livelihoods of more than 50 000 employees to curb salary cuts and job losses where possible and made substantial contributions to help fight and alleviate the impact of Covid-19.
“We repurposed the Pepclo manufacturing facility to produce personal protective equipment (PPE) used the group’s reach into informal communities to distribute food vouchers using FLASH technology, leveraged the Pepkor store footprint to allow customers to make donations at till points and implemented immediate salary sacrifices for the Pepkor board and executives. We also employed additional measures to support our customers who cannot afford to make debt repayments on a case-by-case basis,” Lourens said.
Its operating profit before capital items increased by 17.2 percent to R4bn despite losing R150m as a result of the outbreak and 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 on leases IFRS 16.
The group said this had a material impact and reduced earnings from continued operations by R200m and negatively impacted headline earnings per share by 102 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 created by the pandemic.
Lourens said despite the lockdown and resultant economic impact, Pepkor was positive about the future and confident that they can gain significant market share.
“Our defensive market position and our business model may prove to be quite resilient in the post-Covid-19 environment. A large part of our range includes basic and replenishment products, with a big focus on babies and kids and, therefore, we are 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,” Lourens said.
The share price was down by 1.38 percent to R10.75 a share on the JSE on Wednesday morning.