South Africa’s biggest clothing retailer rolling out 300 new stores this year

Pepkor is set to report strong results for the last three months of 2024, with plans to expand by 250 to 300 new stores in 2025.

The retail giant – which owns well-known South African brands like PEP, Ackermans, Shoe City, Tekkie Town, Refinery, HiFi Corp and Incredible Connection – released a trading update on Monday, 3 February.

This update revealed that the retailer’s group revenue from continuing operations increased by 12.1% to R26.7 billion.

Pepkor’s group sales increased by 9.5%, and like-for-like sales increased by 7.3%.

This was largely driven by its clothing and general merchandise segment, which grew revenue by an impressive 9.2% and contributed the lion’s share of group revenue at 72.1%.

It also grew sales by 9.7%, with like-for-like sales up 7.6%.

However, a stand-out performer in this set of results is Pepkor’s fintech segment.

While the retailer has long been involved in financial services, the expansion of services like Flash and Capfin has become more prominent in the past decade – and now the retailer is reaping the rewards.

Flash empowers informal market traders with technology solutions and has become a key component of Pepkor’s fintech offerings. Similarly, Capfin provides accessible lending solutions to customers across southern Africa.

In the three months ended 31 December 2024, this segment grew its revenue by 35%.

It contributed 14.4% to group revenue – more than the retailer’s furniture, appliances and electronics (FAE) segment.

The financial services businesses increased revenue by 65.7% to R1.6 billion. The retailer said this growth was fuelled by strategic execution in retail credit interoperability, cellular handset rentals and leverage of the group’s insurance capability.

During the quarter, 299,000 new A+ retail credit accounts were activated, bringing the total A+ account base to 3 million customer accounts.

It noted that credit granting remained conservative, with the approval rate continuing its downward trend, reducing to 29% from 34% in the prior year.

In addition, Pepkor’s Flash business continued its growth trajectory, reporting revenue growth of 19.3% to R2.2 billion for the quarter. 

Total throughput increased by 24.4% to R14.5 billion, supported by the rollout of new Flash tap-to-pay devices.

Pepkor’s FAE segment grew revenue by 8.4% and contributed 13.5% of group revenue. Sales in this segment grew by 8.5% and 6.2% on a like-for-like basis.

The retailer explained that enhanced product availability, diligent execution by retail brands and a more favourable consumer environment in South Africa led to strong sales growth.

The quarter began with rapid sales growth during the seven-week period that ended on 16 November 2024.

After this period, robust trading continued in both PEP and Ackermans, delivering double-digit sales growth for the quarter with strong like-for-like sales growth. 

PEP and Ackermans, in aggregate, account for 66% of group sales.

During the quarter, Pepkor opened 95 new stores. On a net basis, the retail store base expanded by 76 new stores to 5,975 stores as of 31 December 2024. 

The retailer said it remains on track with its organic store expansion strategy and plans to open 250 to 300 new stores in FY25.

Pepkor is also off to a good start in 2025, with group sales increasing by 17.8% in the first three weeks of the year.

The retailer said this was underpinned by a very successful back-to-school season in PEP and Ackermans, improved performance in Speciality and Lifestyle, and a positive change in the trajectory of Avenida’s performance.

“The strong performance in the first quarter, combined with continued sales momentum into January 2025 and the ongoing successful execution in fintech, positions the group well to deliver solid results in FY25,” the retailer said.