Pepkor accelerates Brazil expansion

Pepkor plans to almost double its previous target of opening 50 outlets a year in Brazil as Africa’s largest clothing retailer pushes for faster growth in South America.

The company’s Grupo Avenida is on track to unveil 26 stores in the six months through the end of September, adding to the 22 shops opened in its first half, CEO Pieter Erasmus said in an interview Tuesday after the earnings report.

That may double in the next financial year, he said. 

“The customers in Brazil are responding exceptionally well,” Erasmus said. “Every store that we open, we are exceeding our targets.” 

Avenida’s contribution to sales accounted for 5.5% of Pepkor’s revenue, up from 4.4% a year earlier.

The retailer sees an opportunity to open as many as 600 outlets in Brazil in the next five to seven years and has identified three other possible countries in the region, even as far as Mexico, he said.

In its home market, Pepkor, which owns South African chains Ackermans, Pep, and Tekkie Town, is repositioning its women’s clothing with plans to open about 50 standalone stores in the summer to counter intensifying competition from international fast-fashion brands such as Shein and Temu and local retailers such as Shoprite, which also opened a specialist clothing unit. 

Pepkor reported a 9.5% increase in its first-half revenue. A recovery in Ackermans due to more items sold at full price and cheaper shipping rates helped push the company’s retail sales 8.6% higher.

Meanwhile revenue from the its fin-tech unit rose 25% and now contributes 13% Pepkor’s total sales, as it rapidly expands sales of affordable mobile phones at its stores.

Pepkor shares dropped as much as 1.8% in Johannesburg, bringing its decline to 6.3% this year.

The discount clothing retailer, which started operations 100 years ago in rural South Africa and now has 5,823 stores in nine African countries and Brazil, previously had exposure in eastern Europe through Pepco Group.