Pepkor out of the red

Pepkor swung from a profit to a loss in its 2024 financial year but took a significant hit from a R2.7 billion impairment.

Pepkor – which owns brands like PEP, Ackermans, Shoe City, Tekkie Town, Refinery, Bradlows, Sleepmasters, Incredible Connection, and HiFi Corp – released its results for the year through September 2024 on Tuesday.

The company’s revenue grew by 7.8% to R85.14 billion, while its operating profit skyrocketed by 211.1% to R6.89 billion.

The company swung from a full-year loss of R1.29 billion in 2023 to a profit of R2.08 billion. Its basic earnings per share grew by 259.3% to 56.4 cents per share.

The retailer attributes this growth to a resilient performance across its retail and fintech operations. 

CEO Pieter Erasmus said the company’s strategy of offering value-driven, accessible products while broadening its reach into key growth areas has produced tangible results supported by strategic decisions and disciplined execution. 

“Our business model’s resilience is evident in these results. We continue to gain market share at improved margins in a challenging trading environment,” he said. 

“Furthermore, our strategic focus on digital inclusion and fintech has added another powerful dimension to our traditional retail strengths, positioning us to serve our customers better while building sustainable long-term value.”

The retailer said its results were boosted by the additional market share it captured in the year and increased gross profit margin through improved full-price sales.

In addition, Pepkor’s customer acquisition capability in its retail operations enabled rapid growth in fintech. 

Strategic execution in financial services and cellular connectivity added 3 million customers to the company’s A+ retail credit base, FoneYam and Abacus.

The retailer’s participation and reach in the informal market through its Flash business further bolstered growth.

However, Pepkor also reported that its earnings were negatively impacted by a R2.7 billion impairment of goodwill, trade and brand names 

Specifically, R2.4 billion of the impairment is attributable to the clothing and general merchandise unit, which includes Ackermans, Dunns, PEP, PEP Africa, Refinery and Shoe City.

The key factors for the impairment include the continued uncertainty of trading in the retail market, driven by performance in Ackermans, which continues to recover, and a challenging footwear market impacting performance in Tekkie Town and Shoe City.

The retailer said this has resulted in a cautious outlook.

While this is a significant hit, it is a substantial improvement compared to the R6.6 billion impairment recognised in the previous year.

Pepkor declared a dividend of 48.5 cents per share.