Pepkor’s acquisition of Retailability brands marks the retailer’s shift from its traditionally resilient, value-focused base to less defensive and more trend-sensitive markets, according to an analyst.
Aeon Investment Management research analyst Chanté Cain said the purchase complements Pepkor’s offerings by introducing a brand with potentially higher price points, helping diversify its customer base.
“The speciality category has been catering more and more to higher LSMs with Ayana and now Legit. The new brands increase Pepkor’s exposure to less defensive categories. That said, the division’s contribution is still small relative to the rest of the group, and the majority of the business remains defensive,” said Cain.
Pepkor announced on Tuesday that it had concluded the purchase of the brands, including Legit, Swagga, Style and Boardmans, after securing relevant regulatory and competition approvals.
The group first announced the deal in March.
The acquisition strengthens its push into the adult apparel market, particularly womenswear, after years of dominance in baby and schoolwear.
“These businesses will be incorporated into the Pepkor speciality business unit, adding significant scale and expanding its product offering in the adult wear market, especially in womenswear through the Legit brand,” it said.
“The acquisition of the Swagga and Style businesses will deliver strong synergistic benefits, accelerating the expansion of the group’s store portfolio and further supporting Pepkor’s ambitions to grow its share in the adult wear market,” it added.
“The Boardmans online brand, which operates in the homeware product segment, will be incorporated into the Pepkor lifestyle business.”
The R1.7bn deal will add 469 stores to Pepkor’s speciality base, taking the total to more than 1,400.
“We are delighted to have successfully concluded this transaction. This marks the beginning of an exciting chapter for these businesses under the custodianship of Pepkor,” said Tyrone Vieira, CEO of the group’s emerging businesses.
“As we move into the integration phase, we look forward to harnessing the strengths of these businesses within the Pepkor speciality and broader Pepkor ecosystem.”
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