PEP and Ackermans owner Pepkor Holdings opened 319 new retail stores in the financial year to September, as the non-grocery retailer continues to gain market share.
The group, which employs about 47 000 people, now has a footprint of 5 830 stores and reach into the informal market through 202 000 Flash traders.
The group shrugged off several key episodes in the reporting period to report a descent set of results. Group revenue grew 5.3% to R81.4-billion during the year under review, while operating profit increased 11% to R10.3-billion.
The group said it remains highly cash-generative with 92% of sales in cash, which translates to R11.2-billion generated during the year. Pepkor also processed 1.9-billion sales transactions in the period.
However, Pepkor said its revenue growth was negatively impacted by the floods that rocked KwaZulu-Natal in April. The floods particularly hit hard the PEP distribution centre, which represents 40% of the PEP business’ total distribution capacity.
“Operations were fully restored 16 weeks after the floods, and the total loss suffered is estimated at R800-million,” said Pepkor.
“The group carries insurance cover for material damage and business interruption and the claims process is under way. An interim insurance payment of R396-million was received during the year, with the remainder to be recovered in the next financial year.”
Despite this, PEP increased sales by 5% and sold 8.1-million cellular handsets with more than 50% representing smartphones. PEP also opened 134 new stores during the year, expanding its retail store base to 2 579 stores.
PEP’s sister retailer Ackermans increased sales by 2.8% in the period. Pepkor also owns brands such as Tekkie Town, The Building Company, and Incredible, among other assets in its vast portfolio.
Like many businesses operating in the country, Pepkor said it was hit hard by the ongoing power cuts due to Eskom’s constrained grid, saying the group lost 313 000 trading hours due to loadshedding.
“Electricity loadshedding increased to unprecedented levels, especially during the last quarter. During the first half of 2022, loadshedding increased by 80% compared to the prior year,” Pepkor said.
“Following this, loadshedding increased to level six. As a result, the group reported 313 000 lost trading hours during the year, reflecting an increase of 123.2% compared to the prior year.
“While 70.3% of the group’s stores have back-up power sources to support trading during power interruptions, the negative impact of loadshedding on consumer behaviour is far reaching, with fewer customers visiting stores.”
The group also had to contend with the unrest that took place in some parts of KwaZulu-Natal and Gauteng in July 2021, which claimed more than 300 lives and countless losses to the economy.
Pepkor said the unrests resulted in the looting and damage of 549 of its stores, adding that while 386 of these stores were reopened by September 2021, the reopening of 104 stores could only be completed during the current financial year.
It added that a further 37 stores will be reopened in the next financial year.
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