Pepkor Holdings Delivers 4.3% Revenue Growth, Market Share Gains in Challenging Retail Environment

Pepkor Holdings Interim Results 2023
  • Pepkor Holdings Limited reports 4.3% revenue growth in interim results for the six months ended March 2023.
  • Operating profit before capital items decreased by 9.8% to R5.1 billion.
  • Pepkor achieves market share gains in key product categories and expands its store base with 168 new stores.

Pepkor Holdings Limited released its interim results for the six-month period ending on March 31, 2023. The company showcased its ability to adapt and deliver value to customers, achieving a notable 4.3% increase in revenue despite facing challenges in the consumer environment.

One of the key highlights of Pepkor’s interim results was the growth in revenue, which reached an impressive R43.8 billion. While the operating profit before capital items experienced a 9.8% decrease to R5.1 billion, the company demonstrated effective cost control measures in managing its cost base. Despite a decline of 11.7% in headline earnings per share (HEPS) to 80.8 cents, Pepkor’s ability to navigate the market and maintain its value proposition to customers remained evident.

During the six-month period, Pepkor successfully managed to gain market share in key product categories, as evidenced by data from the Retailers’ Liaison Committee (RLC) and GfK. The company experienced market share growth in babies, ladies, home products (PEP), schoolwear, lingerie (Ackermans), computing, appliances, and audio (JD Group). These achievements are particularly noteworthy considering the challenging consumer environment and the constrained spending habits observed among customers.

Pepkor’s presence extended beyond South Africa, as its Avenida business in Brazil performed above expectations. The company reported significant progress in the repositioning of the Avenida brand, resulting in accelerated store rollout plans. Avenida represents a substantial opportunity for growth and diversification outside of Africa for the group.

Throughout the period, Pepkor remained committed to portfolio optimization and capital allocation, exemplified by the closure of the Dealz discount variety brand and PEP Africa’s planned exit from Nigeria. These strategic decisions reflect Pepkor’s dedication to refining its business operations and ensuring long-term sustainability.

The company’s performance was not immune to the challenges posed by electricity load shedding in South Africa, which impacted both Pepkor’s core customers and their shopping behavior. Pepkor responded by increasing the proportion of its store base equipped with alternative power sources to mitigate the impact of outages.

Looking ahead, Pepkor anticipates a slow improvement in the operating and consumer environment. Despite the ongoing challenges, management remains focused on meeting changing customer needs through discount and value offerings. The company aims to create value for all stakeholders and generate attractive returns for investors.

Pepkor Holdings Limited continues to play a crucial role in the retail sector, connecting customers and providing affordable products. With its interim results reflecting resilience and adaptability, the company remains committed to making a positive difference in the lives of its customers and contributing to the overall growth of the industry.

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