Pepkor had a strong performance in its financial year through September 2024 as the retailer rebounded from losses experienced in its 2023 financial year.
Pepkor – which owns brands like PEP, Ackermans, Shoe City, Tekkie Town, Refinery, Incredible Connection, and HiFi Corp – released a trading update for the 2024 financial year on Wednesday.
The retailer reported increased group revenue, which climbed by 7.8% to reach R85.1 billion. Adjusted for a comparable 52-week basis, the revenue increase was 9.2%.
The company saw notable progress in its core segments. The Clothing & General Merchandise (CGM) division, which includes popular brands like PEP and Ackermans, posted a 5.2% revenue rise to R61.4 billion.
Adjusting for the extra trading week in FY23, the growth rate was 7.0%. Pepkor’s Furniture, Appliances, & Electronics segment also performed well, with revenue increasing by 4.5% to R11.0 billion.
One of Pepkor’s standout areas this year was its Fintech division, which reported a 26.8% revenue increase to R12.7 billion.
Pepkor said this growth reflects its strategic expansion into financial services and mobile connectivity, which aims to meet the rising demand for accessible financial solutions in South Africa’s informal market.
Pepkor’s Flash business, which offers services tailored to informal sectors, played a significant role in this growth.
The retailer made a significant portfolio adjustment in its 2024 financial year by completing the sale of The Building Company.
This sale allowed Pepkor to exit the building materials sector, in line with its strategy to streamline operations and optimize shareholder returns. The decision is expected to allow Pepkor’s management to focus on core, high-growth segments like retail and fintech.
However, despite these strong fundamentals, Pepkor’s earnings were affected by a R2.7 billion impairment on goodwill and intangible assets.
The impairment primarily stemmed from challenges in two segments – Ackermans, which is still in recovery, and the footwear market, which impacted Tekkie Town and Shoe City.
Pepkor said the impairment reflects “the continued uncertainty of trading in the retail market” as the company remains cautious about growth prospects in the footwear sector.
However, the impairment charge was not included in headline earnings, which are used as a more consistent measure of underlying profitability.
Therefore, Pepkor expects the following changes to its earnings per share (EPS) and headline earnings per share (HEPS):
| Metric | FY24 Expected Range (cents) | FY24 Expected Change (%) | FY23 Actual (cents) |
| EPS | 61.0 to 65.4 | 241% to 251% | (43.4) |
| HEPS | 132.5 to 146.5 | (6%) to 4% | 140.8 |
| Normalised HEPS (52-week basis) | 133.2 to 145.9 | 5% to 15% | 127.1 |
Overall, Pepkor’s EPS is expected to land between 61.0 and 65.4 cents, a marked increase of between 241% and 251% compared to last year’s loss of 43.4 cents.
This rise can be partly attributed to the 2023 financial year’s low base, as the company posted a loss per share.
Pepkor said this year’s positive results show the retailer’s effective cost management, market share gains in clothing, cellular, and home categories, and strong strategic decisions.
By exiting the building materials market and investing in growth areas like fintech, Pepkor has bolstered its financial stability and allowed the company to focus on its core business.
In addition, the company said the impairment will not negatively impact any potential dividend declared for FY24.
Pepkor’s results for the year ended 30 September 2024 will be published on SENS on or about Tuesday, 26 November 2024.