Pep and Ackermans owner Pepkor says it will continue pursuing further acquisitions as it chases scale, even after a year marked by heavy deal-making.
But as the group lines up more targeted transactions, it says integrating multiple new businesses carries rising execution risk, with delays or weak integration threatening to dilute value and undermine the scale advantage at the heart of its strategy.
The stakes are high, as the group is no longer just a clothing retailer but a growing ecosystem spanning stores, online, logistics, credit, insurance, cellular services and banking. If these parts work together, the group will continue to grow profits and cut costs. If not, the complexity risks eroding the scale advantage it is betting on.
During the 2025 financial year, Pepkor acquired Choice Clothing, entering the semiformal off-price adult wear segment. Choice, which operates 105 stores, is expected to scale to more than 300 over time, supported by Pepkor’s sourcing, supply chain and financial services infrastructure.
The group expanded further through the acquisition of Shoprite’s furniture businesses, OK Furniture and House & Home.
The non-South African portion of the deal, comprising 66 stores, was implemented in October. The local component, which would add most of about 400 stores, remains delayed pending regulatory review after a legal challenge by competitor Lewis.
Pepkor also acquired Legit, Swagga and Style from Retailability, adding 469 stores and significantly increasing its exposure to adult wear. The group strengthened its fintech ambitions through the acquisition of CloudBadger Technologies and regulatory approval to establish a banking presence at home.
Mergers, acquisitions and transformation projects are central to Pepkor’s long-term growth. However, complex integrations across retail, fintech, payments and lending can disrupt operations and dilute value if not managed carefully.
— Pepkor
With several large acquisitions under way simultaneously, the risk is rising. Pepkor said complex integrations across retail, logistics, payments, lending and technology could disrupt operations or dilute returns unless carefully managed.
“Mergers, acquisitions and transformation projects are central to Pepkor’s long-term growth. However, complex integrations across retail, fintech, payments and lending can disrupt operations and dilute value if not managed carefully.
“Poor benefit realisation or execution delays risk, undermining expected synergies and stakeholder confidence,” the group said.
Pepkor said it plans to manage the risks by applying tight governance and disciplined programme management, with clear milestones and accountability. The group will track whether deals deliver the cost savings, revenue growth and efficiency gains promised in their original business cases, while closely monitoring performance and compliance. Experienced integration teams will be used to limit disruption and ensure value is realised.
Intensifying competition
While it faces execution and integration risks from its rapid expansion, the group is also under pressure from intensifying competition across value retail and fintech. Rising costs, highly price-sensitive consumers and the expansion of discount and online rivals are squeezing margins, while shifts toward lower-margin essentials and heavy promotions add further strain, it said.
The group believes it can respond by leaning into its core strengths on price and availability, sharpening its product mix, accelerating omnichannel integration and using data and AI to improve stock accuracy.
It is also investing in organic growth, selective acquisitions and value-added financial, connectivity and insurance services to defend market share, grow new revenue streams and deepen customer loyalty.
Pepkor said its priorities in the 2026 financial year include integrating recent acquisitions, bedding down new retail formats and continuing to build its digital and omnichannel capability.
The group plans to open 250-300 stores during the year.
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