Pepkor, owner of Pep, Ackermans and Incredible Connection, says revenue grew 1.3% to R22.8bn in its first quarter to end-December, with 99 of its stores that were hit by civil unrest in July still not back in operation.
The group had started the period with 161 stores closed as a result of the July riots, and said in a trading update on Thursday it had reopened 82% of the 549 stores hit by looting and vandalism, which represented about 10% of its store base.
Pepkor, valued at R84.1bn on the JSE, is SA’s largest non-grocery retailer. Revenue was also affected by strong demand for some items in the prior comparative period, notably cellular products.
This affected the performance of Pep and Ackermans, which grew like-for-like sales by 1.6% year on year, while its building materials division, The Building Company (TBC), saw sales fall 2.1%.
TBC had also benefited from pandemic-induced trends in the prior period, with the lockdown prompting a boom in demand for home improvement products as people adapted to working and studying at home.
Pepkor said, however, sales momentum had picked up during the course of its first quarter, which continued in January, when it saw “exceptionally strong” sales growth across its retail brands.
In some of the business units the performance was inflated by the shift in back-to-school dates to January from February in the prior year, the statement said.
Sales at Pep and Ackermans jumped 42.7% between December 26 and January 22, Pepkor said, but TBC’s sales fell 7.3% over the same period, offering further confirmation that SA’s pandemic-induced building boom has waned. Cashbuild, TBC’s rival, reported earlier this week that revenue fell 11% in its second quarter, which ended on December 26.
Sasfin senior equity analyst Alec Abraham said it was difficult to get a clear picture of Pepkor’s performance relative to Foschini and Mr Price because of their respective acquisitions of Jet and Power Fashion, which muddy the picture. Official retail sales data for December also haven’t been published yet, he said.
Pepkor’s explanation that sales were off a high base were plausible, however, as Pep and Ackermans did show good growth relative to the apparel market last year and its peers in prior comparative period, said Abraham, with the exception of Foschini.
“In addition to the high base, I would postulate that Pep and Ackermans’ key market, which is biased to the lower-income groups, was also heavily impacted by the substantial 2020 job losses that have not been recouped, the falling away of extra grants and other pandemic support measures and rising food costs, all negatively impacting spending power within this segment,” said Abraham.
Overall, Foschini appears to be faring the best in the SA market, as it has been for some time now, he said.
“Although the economic outlook remains challenging, Pepkor has over many years been able to achieve strong results and demonstrate resilience under these conditions,” the company said on Thursday.
“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.”
Pepkor said while global supply chain issues have stabilised to some extent and inventory levels are satisfactory, uncertainties are expected to persist into 2022. Higher levels of price inflation are expected for the next summer season.
Pepkor was trading 0.7% lower at R22.59 in afternoon trade on the JSE. The shares have risen about 53% over the past year. Mr Price has risen 14% and Foschini 21% over the same period .
Update: January 27 2022
This article has been updated to include the company’s share and comment from an analyst.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.