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Pepkor Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2017/221869/06)
Share code: PPH
Debt code: PPHI
ISIN: ZAE000259479
LEI: 3789006D677C34F69875
("Pepkor", the "company" or the "group")
VOLUNTARY TRADING UPDATE FOR THE THREE MONTHS ENDED 31 DECEMBER 2024
Pepkor delivered strong results for the three months ended 31 December 2024 ("Q1FY25", or
"the quarter"). Group revenue from continuing operations increased by 12.1% to R26.7 billion.
Performance was driven by robust sales growth and market share gains in traditional retail with
significant growth sustained in fintech. Gross profit margin improved, mainly driven by the growth
in the Fintech segment.
Revenue growth by Quarter ended Quarter ended
segment 31 Dec 2024 31 Dec 2023
Q1FY25 Q1FY24 Growth Contribution
Rm Rm % %
Clothing and general 19 220 17 608 9.2% 72.1%
merchandise segment
(CGM)
Furniture, appliances and 3 613 3 332 8.4% 13.5%
electronics segment (FAE)
Fintech segment 3 836 2 841 35.0% 14.4%
Group 26 669 23 781 12.1% 100.0%
TRADITIONAL RETAIL
Group sales increased by 9.5% and like-for-like sales increased by 7.3% for the quarter.
In Southern Africa (excluding PEP Africa and Avenida), like-for-like sales increased by 9.6%.
Outside Southern Africa (PEP Africa and Avenida), like-for-like sales increased by 4.4% in
constant currency but decreased by 14.6% in rand-terms.
Sales growth Total sales growth Like-for-like sales Contribution to
Q1FY25 growth total sales
Q1FY25
Retail segments 9.5% 7.3% 100%
Clothing & general 9.7% 7.6% 84.1%
merchandise segment
- PEP 13.4% 12.1% 38.9%
- Ackermans 10.3% 9.7% 27.1%
- Speciality 9.4% 5.5% 10.2%
- PEP Africa* 20.1% 19.8% 2.7%
- Avenida* 11.3% -2.7% 5.2%
Furniture, appliances & 8.5% 6.2% 15.9%
electronics segment
- Lifestyle
* Constant currency sales growth is reported for PEP Africa and Avenida.
Enhanced product availability, diligent execution by retail brands and a more favorable consumer
environment in South Africa led to strong sales growth. According to Retailers Liaison Committee
(RLC) data for December 2024, Pepkor outperformed the market, gaining market share over 3-,
6-, and 12-month periods.
The quarter began with rapid sales growth during the seven-week period ended November 16,
2024, as highlighted in Pepkor's FY24 results.
Robust trading continued in both PEP and Ackermans subsequent to this, 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.
Trading in Speciality softened during the remainder of the quarter as footwear brands continue to
face intense competition. Strong trading was achieved in the recently launched Refinery Junior
concept.
In Pepkor Lifestyle, sales growth accelerated further, driven by the Home division which achieved
15.1% sales growth. The Tech division delivered 2.0% sales growth off a strong prior period base
and in a highly competitive appliance and consumer electronics market.
Outside Southern Africa, trading momentum remained strong in PEP Africa but currency
devaluation impacted results in rand-terms.
In Brazil, Avenida's like-for-like performance was impacted by the maturity profiles of new stores,
in addition to challenges in merchandise and supply chain expansion while a weaker Brazilian
currency further impacted results.
Clothing, footwear and home (CFH) retail selling price inflation in PEP, Ackermans and Speciality
(in aggregate) amounted to 7.6% for the quarter.
Group cash sales increased by 6.2%. Credit sales increased by 30.9%, driven by the
implementation of the group's retail credit interoperability strategy across its South African-based
CFH retail brands. The overall group credit sales mix rose to 16% from 13% in the same quarter
last year.
During the quarter, 95 new stores were opened. On a net basis, the retail store base expanded
by 76 new stores to 5 975 stores as at 31 December 2024. The group remains on track with its
organic store expansion strategy and plans to open 250 to 300 new stores in FY25.
FINTECH
The Fintech segment continued to deliver strong revenue growth in the group's financial services
and informal market businesses, increasing revenue by 35.0% to R3.8 billion.
The financial services businesses, in aggregate, increased revenue by 65.7% to R1.6 billion,
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 3.0 million customer accounts. Credit granting remained conservative, with the
approval rate continuing its downward trend, reducing to 29% from 34% in the prior year.
The proportion of A+ customers eligible to make purchases remained relatively stable at 72%
(73% prior year), based on the group's more conservative policy of restricting further purchases
for customers who miss one single payment. Collections, non-performing loans, and provisions
remained within comfortable levels.
The number of active FoneYam cellular device rentals increased to 1.2 million by the end of
December 2024, up from 795 000 as at the end of September 2024. Monthly activations continued
to accelerate throughout the quarter, reaching 180 000 devices for the month of December 2024.
The 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 roll-
out of new Flash tap-to-pay devices.
OUTLOOK
In the first three weeks of January 2025, group sales increased by 17.8% as trading momentum
strengthened across all retail businesses. This was underpinned by a very successful back-to-
school season in PEP and Ackermans, improved performance in Speciality and Lifestyle in
addition to 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.
Pro forma constant currency disclosure
The Pepkor group discloses constant currency information to indicate PEP Africa and Avenida's
performance in terms of sales growth, excluding the effect of foreign currency fluctuations. To
present this information, current period (Q1FY25) turnover for these businesses reported in
currencies other than the rand is converted from local currency actuals into rand at the actual
average exchange rates per country for the prior corresponding period (Q1FY24). The table below
sets out the approximate average rand cost for one unit as well as percentage change in sales,
based on the actual continuing results for the period, in reported currency and constant currency,
for the basket of currencies in which these businesses operate.
% change in sales compared to the prior Reported currency Constant currency
period
PEP Africa (0.5%) 20.1%
Avenida (9.7%) 11.3%
Pro forma constant currency has been prepared for illustrative purposes only and, because of its
nature, may not fairly present the Group's financial position, results of operations or cash flows
The trading update and pro forma constant currency disclosure is the responsibility of the directors
and has not been reviewed and reported on by the group's external auditors.
Parow
3 February 2025
Equity and Debt sponsor
Investec Bank Limited
Corporate broker
Rand Merchant Bank (a division of FirstRand Bank Limited)
Date: 03-02-2025 09:00:00
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