Advertise with

General goods retailer remains a difficult company to value despite putting out solid numbers for the three months to December.
General goods retailer remains a difficult company to value despite putting out solid numbers for the three months to December.

Pepkor difficult to price in shadow of Steinhoff


By Larry Claasen - Jan 29th, 09:09

General goods retailer Pepkor, formerly known as Steinhoff Africa Retail, released solid numbers for the three months ended December despite challenging trading conditions.  

Pepkor, which has troubled retailer Steinhoff International as a 71% shareholder, reported sales growth of 6.1% for the quarter. But given its connection to scandal-plagued Steinhoff, the market was still struggling to figure out how much it was worth, said Sasfin Bank senior equity analyst Alec Abraham.

Abraham said though Pepkor’s latest sales numbers were reasonable, its connection to “Steinhoff still loomed over it”. Figuring out what it is worth was not easy because investors could easily end up paying too much or too little, depending on the findings of the investigation into the group, he said.

When the problems at Steinhoff came to light over a year ago, Pepkor’s share price collapsed from R25.40 to a low of R15.11 in a matter of days. It has since recovered to R20.10, giving it a market cap of R69.34bn and a price-earnings of 23.53.

Accounting firm PwC is conducting a forensic investigation into the serious accounting irregularities at Steinhoff.

Steinhoff got its holding in Pepkor when retail magnate Christo Wiese sold his stake for R62.8bn in 2014, making it SA’s largest corporate transaction.

Pepkor said it increased revenue 6.1% to R19.5bn for the quarter. Its low-income chains Pep and Ackermans reported sales growth of 6.8% and like-for-like sales growth of 2.7%.

Abraham said tough trading conditions benefited Pepkor and chains like Pep and Ackermans as people tended to “shop down” when they were under financial pressure. “They tend to choose function over fashion.”

The difficult economy could be seen in the performance of its furniture, appliances and electronics chains, which reported sales growth of 0.6% and a decline in like-for-like sales of 2.7%.

“Overall, Pepkor’s defensive market position and strategy of providing customers with value at affordable prices continue to resonate with a financially constrained consumer. It is expected that these Pepkor fundamentals will continue to support future performance in a very challenging retail environment," it said.
Business Live 

Read more about: trading | steinhoff | sales | retail | pepkor | pep | markets | ackermans

Related News

Is Woolworths unravelling in Australia?
15/02/2019 - 16:35
The sudden departure of two Australia-based nonexecutive directors of Woolworths has fuelled speculation that the troubled retailer will be forced to announce another huge write-down related to the R21bn acquisition of the David Jones department store.

Clover: Israeli link meeting resistance
15/02/2019 - 10:58
The market is nervously considering the implications of empowerment company Brimstone’s decision to review its role in the much-awaited takeover of local dairy giant Clover.

Latest retail sales figures show disappointing trend
15/02/2019 - 10:01
Available economic activity data has shown that the economy ended last year on a weaker footing, with December retail sales figures being the latest to disappoint, declining for the first time in nearly two years.

Woolworths denies that it copied Superlatte products
14/02/2019 - 12:10
Woolworths has categorically denied allegations by Michelle Legge, who founded beverage company Superlatte in 2016, that the retailer has copied her product.

New market store opens through the Pick n Pay market store
14/02/2019 - 11:51
The community of Thokoza welcomed the opening of Matlala Market and it will now offer customers greater variety, a fresh offering and money services under one roof and on their doorstep.