Pepkor revenue rises 7.8% from its value retail as fintech leads growth

Pepkor Holdings revenue growth its being boosted by its fintech segment that offers financial and home data services. Picture: Henk Kruger

Pepkor Holdings revenue growth its being boosted by its fintech segment that offers financial and home data services. Picture: Henk Kruger

Published Nov 7, 2024

Share

Pepkor Holdings’s revenue from clothing, general merchandise and other product sales increased 7.8% to R85.1 billion in the year to September 30, boosted in particular by its fintech offerings.

The clothing and general merchandise (CGM) segment increased revenue by 5.2% to R61.4bn - the prior year comparative was over a 53 week trading period - and the furniture, appliances and electronics segment increased revenue by 4.5% to R11bn.

The group yesterday said its retail operations delivered strong trading results and captured additional market share in clothing, cellular and home data, in spite of the challenging operating environment.

The fintech segment increased revenue by a strong 26.8% to R12.7bn. The annual results are expected to be released on November 26.

Pepkor’s directors said the strong customer acquisition capability within their retail operations enabled rapid growth in fintech through execution in financial services and mobile connectivity.

Pepkor’s participation and reach into the dynamic informal market through the Flash business also bolstered growth.

Flash is a technology company under Pepkor’s fintech segment that offers informal traders an affordable and secure payment system to facilitate trade, with functions that include enabling Informal traders to sell airtime, data, electricity and make bill payments.

On September 30, 2024, the disposal of The Building Company was implemented enabling the group to exit the building materials market and deliver on its objectives to streamline the portfolio of businesses, enhance return on capital and optimise shareholder returns.

The group said a R2.7bn impairment would be recognised in the 2024 results following the annual impairment assessment process on goodwill, trade and brand names with an opening carrying value of R51.2bn.

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

The impairment would impact earnings but would be excluded from headline earnings.

Headline earnings per share (HEPS) for the year, compared to the previous corresponding period, was expected to fall within 132.5 cents and 146.5 cents a share, compared with 146.5 cents the year before.

Normalised HEPS on a 52-week basis was expected to increase between 5% and 15% to between 133.2 cents to 145.9 cents per share.

Pepkor’s board said the impairment would be disregarded when considering the dividend for the year, based on the group’s strong operating performance, cash generation and successful strategic execution, in addition to the healthy financial position.

In September, Pepkor said it would acquire Shoprite’s furniture business, which operates more than 400 stores in South Africa, Botswana, Lesotho, Namibia, Eswatini and Zambia, with the price to be settled in cash and equivalent to 4% of its market capitalization at the time the deal was announced, which was then about R3bn.

The intention was for these stores to join Pepkor Lifestyle, previously the JD Group, which operates more than 900 stores in South Africa, Botswana, Lesotho, Namibia and Eswatini.

BUSINESS REPORT