Pepkor confident to gain market share in ‘new economy’

The group says Covid-19 has added more pressure on consumers already hit by load shedding and low economic growth

Pepkor is unlikely to pay a full-year dividend as it battles Covid-19 fallout, says the group, which includes Pep, Ackermans, Incredible Connection and Timbercity. It had declared a dividend amounting to R721m in its year to end-September 2019.

On Wednesday Pepkor said SA consumers have already been under pressure from load-shedding, high unemployment, and weak economic growth before the Covid-19 pandemic hit. Headline earnings per share (Heps) decreased by 13.6% to 44.3c per share in its six months to end-March, with the group reporting that debtor’s costs have jumped to R868m from R273m previously, partially due to increased bad debts.

Group performance was further affected by the national lockdown implemented towards the end of March by an estimated R476m in lost revenue and operating profit of about R150m, the group said.

Group revenue rose

6.5% to R37.5bn. PEP outperformed the market with its focus on discount clothing, which bodes well in a market where consumers are under pressure.

Pepkor said on

Wednesday it expects the effect of Covid-19 on

SA’s economy and the retail sector to be severe, but is eyeing increased market share.

“Pepkor is confident that it is well-positioned to gain market share in the post-Covid-19 ‘new economy’ with its defensive discount and value positioning being more resilient through its focus on babies’ and children’s clothing and large contribution of basic and replenishment products,” the group said.

However, Pepkor said it has opted to be “prudent” regarding its cash position, and does not expect to declare a full-year dividend. The group did not declare an interim dividend to end-March 2020, but had not paid one in the previous half-year either.