Pepkor grew revenue from continuing operations 12.1% in the quarter ended December, driven by robust sales growth and market share gains in traditional retail with significant growth sustained in fintech.
Group revenue rose to R26.7bn, with the clothing and general merchandise segment contributing 72.1%. Furniture, appliances and electronics contributed 13.5% and the fintech segment 14.4% to total revenue.
In traditional retail, group sales increased 9.5% and like-for-like sales rose 7.3% for the quarter. In Southern Africa (excluding PEP Africa and Avenida), like-for-like sales increased 9.6%.
Outside Southern Africa (PEP Africa and Avenida), like-for-like sales increased 4.4% in constant currency but decreased 14.6% in rand terms.
“Enhanced product availability, diligent execution by retail brands and a more favourable consumer environment in SA led to strong sales growth. According to Retailers Liaison Committee (RLC) data for December 2024, Pepkor outperformed the market, gaining market share over 3-, 6-, and 12-month periods,” Pepkor said in a statement on Monday.
The quarter began with rapid sales growth during the seven-week period ended November 16 2024, Pepkor said.
Robust trading continued in both PEP and Ackermans subsequent to this, delivering double-digit sales growth for the quarter with strong like-for-like sales growth. PEP and Ackermans, in aggregate, account for 66% of group sales.
Trading in Speciality softened during the remainder of the quarter as footwear brands continue to face intense competition. Strong trading was achieved in the recently launched Refinery Junior concept.
In Pepkor Lifestyle, sales growth accelerated further, driven by the Home division which achieved 15.1% sales growth. The Tech division delivered 2% sales growth off a strong prior period base and in a highly competitive appliance and consumer electronics market.
The Fintech segment continued to deliver strong revenue growth in the group’s financial services and informal market businesses, increasing revenue by 35% to R3.8bn.
The financial services businesses, in aggregate, increased revenue by 65.7% to R1.6bn, fuelled by strategic execution in retail credit interoperability, cellular handset rentals and leverage of the group's insurance capability.
During the quarter, 299,000 new A+ retail credit accounts were activated, bringing the total A+ account base to 3-million customer accounts. Credit granting remained conservative, with the approval rate continuing its downward trend, reducing to 29% from 34% in the prior year.
Outside Southern Africa, trading momentum remained strong in PEP Africa but currency devaluation affected results in rand-terms, it said.
In Brazil, Avenida’s like-for-like performance was affected by the maturity profiles of new stores, in addition to challenges in merchandise and supply chain expansion while a weaker Brazilian currency further affected results.
Group cash sales increased 6.2% and credit sales increased by 30.9%, driven by the implementation of the group's retail credit interoperability strategy across its SA-based CFH retail brands.
During the quarter, 95 new stores were opened. On a net basis, the retail store base expanded by 76 new stores to 5,975 stores as at December 31 2024. The group remains on track with its organic store expansion strategy and plans to open 250 to 300 new stores in financial year 2025, it said.
In the first three weeks of January, group sales increased by 17.8% as trading momentum strengthened across all retail businesses, Pepkor said.
“This was underpinned by a very successful back-to-school season in PEP and Ackermans, improved performance in Speciality and Lifestyle in addition to a positive change in the trajectory of Avenida's performance.
“The strong performance in the first quarter, combined with continued sales momentum into January 2025 and the ongoing successful execution in fintech, positions the group well to deliver solid results in financial year 2025,” it concluded.
By market close Pepkor’s share price has risen 3.37% to R27.69.
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