Pepkor Holdings on Monday delivered strong results for the three months ending 31 December 2024, with group revenue from continuing operations climbing by 12.1% to R26.7 billion.
The surge in performance has been attributed to robust sales growth and market share gains in traditional retail, complemented by significant advancements in the group's fintech segment.
The company's sales performance during the quarter reflected a 9.5% increase in total group sales, while like-for-like sales saw a notable rise of 7.3%. Notably, in Southern Africa, excluding PEP Africa and Avenida, like-for-like sales achieved an increase of 9.6%.
However, challenges were evident in regions outside Southern Africa, where like-for-like sales rose by 4.4% in constant currency but fell by 14.6% in rand terms.
The quarter commenced with rapid sales growth during the seven weeks ending 16 November 2024, paving the way for strong trading momentum that persisted across both PEP and Ackermans.
Together, these brands accounted for a significant 66% of group sales, delivering double-digit growth and reflecting a healthy consumer appetite in the retail sector.
However, the Speciality segment did experience some trading difficulties, particularly in footwear brands battling stiff competition. Despite this, Pepkor’s recently launched Refinery Junior concept has shown promising results.
Meanwhile, within Pepkor Lifestyle, sales growth accelerated significantly, buoyed by the Home division's standout performance, which recorded a remarkable 15.1% sales growth. The Tech division maintained a 2.0% growth, despite operating in a highly competitive market for appliances and consumer electronics.
Focusing on regional performance, although trading momentum in PEP Africa remained strong, the effects of currency devaluation were apparent in its results when translated into rand terms. In Brazil, Avenida faced challenges related to the maturity of new stores and merchandise supply chain obstacles, exacerbated by a weaker Brazilian currency.
The clothing, footwear, and home (CFH) retail sector witnessed an inflation of selling prices totalling 7.6%. Cash sales experienced a 6.2% increase, while credit sales skyrocketed by 30.9%, a result of the effective implementation of the group's retail credit interoperability across South African-based CFH brands.
Consequently, the overall credit sales mix rose to 16%, up from 13% during the same quarter last year.
Pepkor continues to expand its footprint with the opening of 95 new stores during the quarter, leading to a net increase of 76 retail locations, totalling 5 975 stores as of 31 December 2024. The company remains committed to its organic expansion strategy, with plans to inaugurate between 250 to 300 new stores in FY25.
On the fintech front, Pepkor reported astounding revenue growth of 35.0% in its financial services and informal market businesses, with total revenue reaching R3.8bn. Financial services alone experienced a stellar increase of 65.7% to R1.6bn, fuelled by strategic enhancements in retail credit interoperability, cellular handset rentals, and the utilisation of the group's insurance capabilities.
The activation of 299 000 new A+ retail credit accounts now brings the total account base to 3.0 million, despite a cautious approach to credit granting, reducing approval rates to 29% down from 34% in the previous year.
The positive momentum has continued into January 2025, with group sales skyrocketing by 17.8% in the first three weeks. This growth has been propelled by a successful back-to-school season in PEP and Ackermans, alongside an improved performance in Speciality and Lifestyle segments.
With a strong showing in the first quarter, along with sustained sales momentum into January 2025 and continued fiscal success in the fintech sector, Pepkor Holdings is well-positioned to deliver solid financial results throughout FY25.
BUSINESS REPORT