JSE-listed Pepkor Holdings is reporting a strong performance in its annual results, registering a 106.7% surge in profit and market share gains which have propelled the company past its pre-Covid-19 performance levels.
The owner of well-know brands like Pep, Ackermans, Tekkie Town and Incredible Connection, managed to rise above the impact of the July unrest in KwaZulu-Natal and parts of Gauteng which saw 549 of its stores – which make up 10% of its store base – hit by looting.
“Our business model and market positioning – the group owns more than 30 brands across the value retail landscape – allowed us to entrench our position as the top discount and value retailer in the South African retail market, providing unparalleled value to our customers,” Pepkor CEO, Leon Lourens said in a statement.
The value retail chain company saw its headline earnings per share (Heps) rise by 106.7% to 135.4 cents in the current period from 65.5 cents in 2020, the current Heps is also higher than the 2019 figure of 96.8 cents. The company also saw operating profit for the period grow by 40% to R9.3 billion.
Pepkor saw a 9.2% growth in revenue during the period to R77.3 billion, boosted by an exceptional performance in its clothing and general merchandise divisions which contributed 64% and 84% to overall revenue respectively. The current 2021 revenue figure is also 11.1% higher than that recorded in the 2019 period.
The company finds itself in a strong cash position, raking in R11 billion from its operations. Further strengthening this position is its substantial reduction of net debt from R7.1 billion in the prior period to R5.0 billion.
“This is a substantial reduction and plans are in place to further smooth and extend our repayment profile. Our debt strategy remains to diversify our funding sources through our bond programme and reduce the overall cost of funding,” Lourens said.
Market share gains
The group is reporting market share gains in most of the categories it trades in. Adding that, since 2019 Pepkor has gained 201 basis points of the market share in the clothing, footwear and homeware categories in which it trades
“Our fundamentals are in place and our disciplined approach is paying off, and this is particularly evident over the past 18 months. Our teams have weathered the impact of the Covid pandemic, a slowdown in consumer spending and the civil unrest in July of this year,” Lourens said.
Shareholders will receive a 44.2 cents dividend from the group after it opted not to pay dividends during the precarious times of 2020 to preserve cash.
Moving forward, the retailer, which managed to open 247 new stores across the country this year alone, says it looks to continue offering its customers value for money by retaining low prices.
“We are expecting our customers to be under [further] pressure and we will be faced with challenges such as supply chain interruption, load shedding, and unprecedented levels of unemployment,” Lourens said.
“However, Pepkor is the value retailer that gives our customers value-for-money products and services at the lowest prices, and at their convenience. We have set up the business for growth and are determined to succeed,” Lourens said.