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Commentary On Recent Trading And The Impact Of The Coronavirus
Pepkor Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2017/221869/06)
Share Code: PPH
ISIN: ZAE000259479
(“the Company” or “Pepkor”)
COMMENTARY ON RECENT TRADING AND THE IMPACT OF THE CORONAVIRUS
The following update was provided at the Pepkor annual general meeting today by Mr. Leon
Lourens, the Chief Executive Officer of the Company:
Consumers have remained under financial pressure in the current economic environment and
trading remains volatile.
Trading during January was stronger in both Pep and Ackermans which achieved double-digit
growth in sales on the back of the shift in “back to school”. This was followed by weaker trading
in February and brings year-to-date performance largely in line with that what was reported
during the first quarter.
Trading in both JD Group and The Building Company was weaker during January and
February in context of the continued challenging trading environment for durable and building
material products. High unit prices and the challenges in the construction industry continue to
impact on the businesses in these divisions.
The impact of the Coronavirus (COVID-19) has not been significant on group sales year-to-
date but will undoubtedly have an impact on the second half of the current financial year due
to the lag effect in the supply chain. Most of Pepkor’s retail brands source products from China
and interruptions in production will in all likelihood lead to temporary shortages on certain stock
items. Certainty on the exact impact will only become clear once most factories resume
normalised production levels.
Pepkor’s defensive business model will count in its favour to reduce the risk and impact on
the group. The bulk of Pepkor’s product range is defensively skewed towards basic, everyday
products which are sourced well in advance of it being required in-store. This results in fairly
long supply chain lead times, allowing our buying teams, in collaboration with our long-term
loyal suppliers, the opportunity to tactically respond and put measures in place to mitigate any
negative impact. Management therefore expects interruptions to its product availability but
remains optimistic that customer service levels in the respective retail brands will be largely
maintained.
Parow
11 March 2020
Sponsor
PSG Capital
Date: 11-03-2020 12:00:00
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