Pepkor Holdings has reported a return to profitability for the financial year ended September, driven by growth in the retail and financial technology segments.
Owner of popular clothing brands PEP and Ackermans, the group posted a profit before tax of R3.7bn, after a restated loss of R502m recorded in the previous financial year. Profit for the year improved to R2.08bn after a R1.29bn loss a year ago.
Pepkor declared a dividend of 48.5c. Its shares jumped as much as 7% in early trade, before settling 4.82% higher at R25.25. This was their biggest one-day gain since mid-June.
“The group captured additional market share and increased gross profit margin through improved full-price sales,” it said.
Pepkor’s customer acquisition capability in its retail operations enabled rapid growth in fintech. Strategic execution in financial services and cellular connectivity added 3-million customers to the group’s A+ retail credit base, FoneYam and Abacus, it said.
Total group revenue increased by 7.8% to R85.1bn. The clothing and general merchandise division contributed R61.4bn, reflecting 5.2% growth, while the furniture, appliances and electronics division posted a 4.5% rise, reaching R11bn.
However, some challenges persisted. The group recorded a R2.7bn impairment on goodwill, trade and brand names due to continued uncertainty in the trading environment, particularly for Ackermans, and difficulties in the footwear market affecting Tekkie Town and Shoe City. However, this impairment was lower than the R6.6bn recorded last year.
Headline earnings per share (HEPS) from continuing operations declined 0.4% to 140.2c. On a normalised and comparable 52-week basis, normalised HEPS grew 10.3% to 140.2c, the group said. The previous year had 53 trading weeks.
Pepkor plans to open 250 to 300 new stores in 2025 with the expectation that consumer spending power would improve as food prices ease and electricity supply stabilises.
“As demonstrated by this year’s results, fintech, financial services, connectivity solutions, and the informal market present valuable opportunities for expansion, while mergers and acquisitions continue to be considered to diversify and strengthen the group’s portfolio. Pepkor is well-positioned to capture additional market share with a robust foundation for continued growth across the retail and fintech sectors,” it said.
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