Pepkor loses 211,000 trading hours because of load-shedding

Elevated levels of load-shedding have resulted in Pepkor, the owner of popular retail brands such as Pep, Ackermans, and Tekkie Town, losing 211,000 trading hours over the last six months. 

This was revealed in the company’s interim results for the six months ended 31 March 2023. 

Pepkor said that intensified load-shedding led to a 500% increase in lost trading hours to a record 211,000 hours. 

The company’s diesel costs jumped 142% to R72 million in the last six months. 

In response to worsening load-shedding, Pepkor has increased the proportion of its stores with alternative power sources to 74% and launched a new 5.9MW solar project. 

This project will be phased in over the next two years and will cover the electricity needs of eight distribution centres and four office complexes. 

Pepkor has turned to industrial generators at its Parow, Cape Town manufacturing plants to ensure its manufacturing is not disrupted by load-shedding. 

Despite the tough operating environment with load-shedding, high inflation, and deteriorating public services, Pepkor grew its revenue by 4.3% to R43.8 billion. 

However, its operating profit came under pressure, declining by 9.8% compared to the same period a year earlier. 

No interim dividend is declared in line with Pepkor’s historical dividend policy, as headline earnings per share declined by over 10%.

The group opened 168 new stores – 99 on a net basis – during the period, expanding the group’s retail store base to 5,929 stores. It expects to have over 6,000 stores by the end of 2023.

Grim outlook 

Pepkor CEO Pieter Erasmus said that Pepkor “anticipates that the operating and consumer environment will be challenging in the short to medium term” with intensified load-shedding and high inflation. 

Worryingly for Erasmus, the tough environment has begun to impact consumer spending, with Pep’s clients cutting back on discretionary spending to focus on necessities. 

Due to the challenging operating environment, trading has been weak in the second half of Pepkor’s financial year. 

To compensate for the weak trading, Pepkor has begun implementing cost reduction measures to maintain the affordability of its products. 

“It is not expected that the operating and consumer environment will improve anytime soon.”