Defensive Pepkor grows sales in tough environment


Defensive Pepkor grows sales in tough environment

Published Date: 2019-08-08 | Source: Stephen Gunnion | Author: Stephen Gunnion

Defensive Pepkor grows sales in tough environment

The retailer says it has continued to grow its share of the market through its pricing strategy and value approach.

Pepkor has reported strong third-quarter sales, despite volatile trading in an environment of continued pressure on consumer spending. The retail giant says its defensive market position and cheap prices helped it to continue growing market share.

In a trading update, the group reported revenue growth of 11.7% for the three months to end June, helped by the the shift of the Easter holidays to April. That boosted total revenue for the first nine months of its financial year by 8.5% to R53.1 billion.

Its Speciality division, which includes John Craig, Refinery, Tekkie Town and Shoe City, was the standout performer, with nine-month sales growth of 9.5% and like-for-like growth of 4.2%. It said the clothing categories reported a satisfactory performance, with a continued softer performance from footwear.

Pep and Ackermans grew combined sales by 6.7% and like-for-like sales by 2.9%. Sales of clothing, footwear and homeware remained encouraging in the current operating environment, it said. Pep Africa reported a 0.7% decline in sales in rand terms. However, sales in constant currency rose 14.9%, with like-for-like growth of 11.4%. It said good results were achieved in most countries while macro-economic challenges continued to impact the performance of its Zimbabwe stores.

Pepkor's furniture, appliances and electronics stores reported an 8.3% rise in sales for the nine months, supported by income from the new internally-funded credit book. Merchandise sales increased by 1.9% and like-for-like sales fell by 1.3% as consumers continued to prioritise spending on essentials over durable products. Building materials also reported constrained sales growth, up just 0.6% for the full nine months and down by 1.1% in the third quarter. It attributed this to high levels of competition within the contracting and building materials market, which continued to place significant pressure on margins.

Its shares closed 0.1% up at R16.93 yesterday.

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