Pepkor Reports R3.7 Billion Profit Amidst R149 Million Impairment

Pepkor Swings to Profit Amidst Challenging Market Conditions

Johannesburg, November 26 – South African discount retailer Pepkor Holdings (PPHJ.J) has reported a remarkable turnaround, swinging to a R3.7 billion profit before tax in the year ending September 30, 2024. This is a significant recovery from the restated loss of R502 million in the previous financial year, despite a R2.7 billion impairment on its clothing, footwear, and general merchandise business.

Key Financial Highlights

• Revenue Growth: Group revenue increased by 7.8% to R85.1 billion, driven by strong performances across divisions.
  • Clothing and general merchandise contributed R61.4 billion, reflecting a 5.2% increase.
  • Furniture, appliances, and electronics grew revenue by 4.5% to R11 billion.
• HEPS Performance: Headline earnings per share (HEPS) from continuing operations fell by 0.4% to 140.2 cents, primarily due to impairments. However, normalized HEPS on a comparable 52-week basis rose by 10.3% to 127.1 cents.

Impairment Adjustments

Pepkor recorded an additional R2.7 billion impairment on goodwill, trade, and brand names in its Ackermans, Tekkie Town, and Shoe City businesses, attributing it to:

• A challenging trading environment for Ackermans.
• Poor performance in the footwear market affecting Tekkie Town and Shoe City.

Despite the impairments, this year’s figure was a marked improvement over the R6.6 billion impairment recognized in the prior year.

Growth Drivers

Pepkor attributed its recovery to:

1. Market Share Gains: Increased customer acquisition in its retail operations boosted its fintech business growth.
2. Gross Profit Margins: Higher full-price sales led to improved gross profit margins.
3. Diversified Operations: Strong revenue growth across various divisions, including furniture and electronics.

Outlook

Pepkor remains focused on navigating South Africa’s uncertain economic environment while leveraging its position in the discount retail sector. The group aims to sustain growth through customer-focused strategies and operational efficiencies in the coming year.

Pepkor’s annual performance demonstrates resilience amidst a tough trading climate. With rising revenue and improved profitability, the retailer has shown its ability to adapt and grow, even in challenging market conditions.