Pepkor says market-share gains boosted half-year earnings
By Nick Hedley - May 29th, 09:34
Pepkor, which owns the Pep and Ackermans brands, says sales and earnings rose in the six months to end-March thanks partly to market-share gains in clothing and merchandise.
“The Pepkor group reported satisfactory results in a challenging retail market,” it said. “Respectable earnings growth on a comparable basis was achieved, notwithstanding lower than expected sales growth.”
The retailer, previously known as Steinhoff Africa Retail, said its “defensive market positioning”, partly hinged on competitive prices, boosted growth.
Group revenue rose 7% to R35.3bn. Excluding once-off items, operating profit increased by 6.9% to R3.4bn and headline earnings per share grew 3.4% to 52.4c. The company did not declare a dividend.
Pepkor said it grew its market share as it expanded its footprint to 5,332 stores, including 164 new store openings in the period.
The clothing and general merchandise segment, the group’s largest, contributed revenue growth of 5.2% to R23.1bn and a 6.6% rise in operating profit to R3.1bn.
“By Pepkor standards, the sales growth achieved by many of its retail brands was lower than expected. However, the group increased its market share according to the Retail Liaison Committee (RLC).”
Meanwhile, the building-materials segment contributed a 1.5% increase in revenue to R4bn but a 66.9% fall in operating profit to R42m.
“Management remains cautiously optimistic about the retail environment and expects improved consumer confidence following the completion of SA’s elections,” it said.
The group expects to grow its store footprint, with space growth in financial year 2019 of between 3% and 4% on a net basis.
Pepkor’s shares were 2.8% down at R17.20 in early trade on Wednesday.Business Live
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