Pepkor Holdings’ share price hit an intraday record high of R29.61 briefly when the markets opened on Tuesday, pushing the group’s market capitalisation to R108bn, and solidifying its position as one of SA’s retail heavyweights.
The group’s share price gained 56% over the past six months and it is up more than 47% so far this year.. Its biggest rivals, Mr Price and TFG have also had good years, with their market caps now at R75bn and R57bn, respectively.
Pepkor’s rise follows a series of strategic moves, including its acquisition of Choice Clothing, a discount retailer with more than 100 stores in SA and Namibia. The acquisition marked a step in expanding Pepkor’s market share in the adult wear sector, identified as an area of underperformance, said the group.
Pepkor chief operating officer Sean Cardinaal said Choice Clothing bridged a gap between formal and informal markets offering Pepkor the opportunity to expand its reach and provide customers with the lowest prices.
He said the acquisition was expected to triple Choice’s retail footprint in the medium term, leveraging Pepkor’s scale and resources.
The group’s rise also reflects its return to profitability. For the financial year to end- September, Pepkor reported a profit before tax of R3.7bn, a turnaround from a restated loss of R502m the previous year. Net profit rose to R2.08bn, compared with the loss of R1.29bn before.
Total group revenue rose 7.8% to R85.1bn. The clothing and general merchandise division, Pepkor’s largest contributor, recorded R61.4bn in revenue, growing 5.2%. The furniture, appliances, and electronics division followed with an increase of 4.5% to R11bn.
Pepkor declared a dividend of 48.5c per share.
Despite its achievements, Pepkor faced challenges, including a R2.7bn impairment on goodwill, trade, and brand names. This was attributed to continued uncertainty in the trading environment, particularly affecting Ackermans, and difficulties in the footwear market, affecting Tekkie Town and Shoe City. However, the impairment was lower than the R6.6bn recorded in the previous year.
Pepkor said it planned to build on its momentum by opening 250-300 new stores in 2025. The group expected improved consumer spending power as food inflation eased and electricity supply stabilised.
“Pepkor is well-positioned to capture additional market share with a robust foundation for continued growth across the retail and fintech sectors,” said the group.
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