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PEPKOR HOLDINGS LIMITED - Voluntary Trading Update For The Nine Months Ended 30 June 2019

Release Date: 07/08/2019 15:51
Code(s): PPH     PDF:  
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Voluntary Trading Update For The Nine Months Ended 30 June 2019

Pepkor Holdings Limited
(Previously Steinhoff Africa Retail Limited)
(Incorporated in the Republic of South Africa)
(Registration number: 2017/221869/06)
Share Code: PPH
ISIN: ZAE000247995
(“PEPKOR” or the “Company”)

VOLUNTARY TRADING UPDATE FOR THE NINE MONTHS ENDED 30 JUNE 2019

Pepkor increased revenue by 8.5% to R53.1 billion for the nine months ended 30 June 2019.
Performance was supported by a stronger third quarter which saw revenue grow by 11.7%,
largely benefitting from the shift of Easter to April. Trading however, remains volatile in an
environment of continued pressure on consumer spending.

Clothing & general merchandise

The clothing and general merchandise segment reported revenue growth of 6.4% for the nine-
month period, supported by 9.2% growth during the third quarter.

For the nine-month period, the Pep and Ackermans brands in aggregate reported sales
growth of 6.7% and like-for-like sales growth of 2.9%. Retail space expanded by 4.8% year-on-
year. Core clothing, footwear and homeware (CFH) product categories achieved 7.1% sales
growth and 3.5% like-for-like growth. This remains encouraging in the current operating
environment. Pep and Ackermans in aggregate reported inflation of 4.2% in CFH retail selling
prices.

Pep Africa reported a decline in sales of 0.7% in rand terms for the nine-period. This includes
strong constant currency performance with sales growth of 14.9% and like-for-like growth of
11.4%. Good results were achieved in most countries while macro-economic challenges in
Zimbabwe continue to impact performance.

The Speciality division reported sales growth of 9.5% with like-for-like growth of 4.2%, in
aggregate, for the nine-month period. Satisfactory performance was achieved in the clothing
product categories with continued softer performance in footwear.

Furniture, appliances & electronics

Performance in the furniture, appliances and electronics segment was supported by income
from the new internally-funded credit book. The segment reported revenue growth of 8.3% for
the nine-month period, including 10.9% growth during the third quarter.

During the nine-month period merchandise sales increased by 1.9% and like-for-like sales
declined by 1.3% as financially constrained consumers continue to prioritise spending on
essentials over durable product categories. Profitability of this segment will be impacted in the
current financial year by the implementation of IFRS 9 on the new internally-funded credit
book.

Building materials

Sales growth of 0.6% was achieved in the building materials segment with like-for-like growth
of 1.8% during the nine-month period. Sales contracted by 1.1% during the third quarter as high
levels of competition remain within the contracting and building materials market. This
continues to place significant pressure on margins.
Fintech

The segment reported 40.7% revenue growth for the nine-month period, including growth in
excess of 50% during the third quarter. The FLASH business continues to achieve significant
growth, while Capfin’s performance is further supported by income earned on the new
internally-funded credit book. The implementation of IFRS 9 will also impact this segment’s
profitability.

Outlook

Pepkor’s defensive market position and strategy of providing customers with value at
affordable prices continues to resonate with customers, as demonstrated through continued
market share growth. This will continue to support performance in challenging operating
conditions where sales volatility is expected to continue as customers have to contend with
high levels of unemployment and increased cost of living in what remains to be an extremely
challenging retail environment.

Impact of Pepkor group’s pro forma constant currency disclosure

The Pepkor group discloses unaudited constant currency information to indicate Pep Africa’s
performance in terms of sales growth, excluding the effect of foreign currency fluctuations. To
present this information, current period turnover for Pep Africa reported in currencies other
than ZAR are converted from local currency actuals into ZAR at the prior year's actual average
exchange rates. The table below sets out the percentage change in sales, based on the
actual results for the period, in reported currency and constant currency for the basket of
currencies in which Pep Africa operates.

 % change in sales on prior period                                    Reported       Constant
                                                                      currency       currency


 Pep Africa                                                             (0.7%)         14.9%


The information included above is the responsibility of the directors and does not constitute an
earnings forecast and has not been reviewed and reported on by the Company’s external
auditors. The constant currency information has been prepared for illustrative purposes only.

Parow

7 August 2019

Sponsor

PSG Capital

Date: 07/08/2019 03:51:00
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