Home office demand boosts Pepkor

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Home office demand boosts Pepkor

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Published Date: 2021-04-29 | Source: Stephen Gunnion | Author: Stephen Gunnion

Home office demand boosts Pepkor

The retail group reported a strong rise in demand for furniture and electronics as South Africans prepared to study and work from home.

Pepkor expects to report a strong rise in first-half earnings as shoppers targeted its discount offering and sales of furniture and electronics rose as South Africans kitted out home offices and studies. The group says it continued to gain market share in nearly all its retail brands, backed up by data from the Retailers' Liaison Committee.

In a trading statement for the six months to 31 March, the Steinhoff subsidiary said it had to deal with restrictions imposed to deal with the second wave of Covid-19 and the delayed start to the school year. Still, sales of clothing (including school uniforms) and general merchandise increased by 8.1% to R26.3-billion, supported by strong performances at Pep and Ackermans. Its Speciality business, which includes the Tekkie Town, Refinery, Dunns and ShoeCity chains, benefitted from demand for casual wear and branded footwear, growing sales by 11.3%. Excluding John Craig, the menswear chain it sold in February, sales were up 16.6%.

While Covid-19 held back sales growth in its clothing and apparel divisions, it boosted demand for furniture, appliances and electronics as consumers continued to upgrade technology to support working or studying remotely and bought more furniture and appliances. Revenue at its JD Group division, which includes a number of furniture chains as well as HiFiCorp and Incredible Connection, jumped 12.8% to R5.7-billion.

Revenue from continuing operations rose by 8.1% to R36.5-billion even though the corresponding period last year was largely unaffected by the pandemic. In addition to lower interest rates, Pepkor said conservative credit granting impacted revenue from its credit books. Excluding the credit books, it said it achieved revenue growth of 9.9% for the six months. As a result of its more prudent granting of credit, cash sales increased by 10.7% while credit sales decreased by 3.8%, making a smaller contribution to total sales.

Sales at The Building Company, which houses all its hardware chains, rose 9.6%. However, the business has been accounted for as a discontinued operation following the sale to Cashbuild last year. It said the transaction was currently in front of the competition authorities for approval.

Strong cash generation over the period helped it reduce net debt to R6.1-billion from R14.1-billion at the end of March 2020. That contributed to a lower interest bill, further boosting first-half profit. For the six months, it said interim earnings and headline earnings per share were likely to be at least 20% higher than the 43.8c and 45.6c it reported last year.

Pepkor's half-year results are scheduled for release on 27 May. Its shares rose 5.2% to R16.32 yesterday.





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