Retail company Pepkor reported flat sales in its main Pep brand, and declining sales at Ackermans and its tech and furniture stores over the peak shopping season due to load-shedding and a constrained consumer.
In a trading update for the three months to end-December, group like-for-like sales declined 1.4%. However, including its new Brazilian business, discount adult clothing store Avenida and newly opened 132 stores, it grew sales 7.7%.
It said it had missed the mark with fashion and price choices at Ackermans, but had conducted a strategic review to learn from its mistakes and has now marked down boys and ladies wear.
Like-for-like sales at Ackermans were down 8.0% with overall sales, including new stores dropping 2.9%. The Pep, Ackermans and Shoe City brands, however, saw double-digit growth in January thanks to “back to school” uniform sales.
Pepkor’s sales update is also the latest evidence of how rolling power cuts, coupled with stretched consumer finances in the face of elevated cost-of-living and higher interest rates, have hobbled growth for SA companies.
This was the first December with intensive load-shedding, and fashion retailer Mr Price reported weaker sales with TFG and Truworths who have about 70% of stores with backup power reporting better sales.
Pepkor says about 70% of its stores, which include Incredible Connection, and furniture stores Russels and Bradlows, have backup power, with Pep stores in the rural and outlying areas most affected by blackouts. The group said the number of trading hours it lost during the quarter increased 221%.
In the three months to the end of 2022, it reported a 6.2% growth in sales at retailer Pep with the growth mostly explained by its 5% average price increase in goods rather than increased sales volumes.
Pepkor’s speciality division stores, which include middle-class brands Refinery, Dunns and Shoe City, saw growth of 8.3% with same-store growth at 3.5%. But Tekkie Town did not grow sales in a highly competitive sneaker market, it said.
The JD Group division that includes HiFi Corporation and furniture stores saw same-store sales decline 2.7% as consumers cut back on big-ticket furniture items and electronic items.
Pepkor sells 91% of goods for cash, but saw cash sales increase 1.8% for the quarter, while credit sales rose 21.%
Truworths and Woolworths also reported increased sales on credit over the peak period as consumers appear to be using debt to fund fashion purchases.
Its Brazilian discount retailer Avenida, in which it owns a majority stake, performed well and it opened five new stores bringing the total to 140 stores. It plans to open 15 stores within the 2023 financial year and has lowered prices to be more competitive, it said.
“Good progress has been made on the value creation plan of the business to create a significant player in the Brazilian value and discount retail market.”
The share price had dropped 0.58% early afternoon to R20.70
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