Wrap Text
Interim Results for the six months ended 31 March 2025
Pepkor Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2017/221869/06)
Share code: PPH
Debt code: PPHI
ISIN: ZAE000259479
LEI: 3789006D677C34F69875
("Pepkor", the "company" or the "group")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2025
Pepkor delivers 18.9% growth in normalised headline earnings per share
Strong half-year results driven by consistent retail performance, strategic execution in
fintech and disciplined cost management
PERFORMANCE HIGHLIGHTS
Continuing operations
- +12.8% revenue growth to R48.8 billion
- +110 bps gross profit margin expansion to 39.2%
- +13.3% operating profit growth to R5.8 billion
- +12.4% growth in HEPS to 84.3 cents (+18.9% normalised*)
- 82.3% cash conversion**
- 23.7% return on net assets**
* Normalised results are adjusted for the normalisation in the group's effective tax rate.
** Rolling 12-month basis.
Six months Six months
ended ended
Results 31 March 2025 31 March 2024 % change
Revenue (Rm) 48 809 43 264 12.8%
Operating profit before capital items
(Rm) 5 795 5 115 13.3%
Earnings per share (cents) 83.1 75.4 10.2%
Headline earnings per share (cents) 84.3 75.0 12.4%
Headline earnings per share on a
normalised basis (cents)* 84.3 70.9 18.9%
Net asset value per share (cents) 1 642.2 1 615.6 1.6%
Results from total operations –
including discontinued operations
Earnings per share (cents) 83.1 67.4 23.3%
Headline earnings per share (cents) 84.3 77.7 8.5%
TRADITIONAL RETAIL
Continued strong trading momentum drives market share gains in retail
The group's core Traditional Retail operations demonstrated strong trading momentum during the
period, outperforming the market and expanding market share***. Trading performance was
supported by improved product availability, healthy growth in retail credit interoperability and solid
growth in cellular connectivity.
While tailwinds such as downward trending inflation, reduced electricity load shedding and the
introduction of the two-pot retirement system provided some relief, the market remains subdued
and highly competitive. Structural challenges including high unemployment and low economic
growth persist, and consumers remain financially constrained. The group's ability to deliver robust
results in this context underscores the resilience of its defensive business model, which remains
firmly focused on meeting customer needs.
The Clothing and general merchandise (CGM) segment increased revenue by 9.5% to R34.5
billion, and the Furniture, appliances and electronics (FAE) segment increased revenue by 9.1%
to R6.5 billion.
H1FY25 H1FY25
Total sales Like-for-like
growth sales growth
Sales growth % %
Traditional Retail segments 10.0 7.8
Clothing and general merchandise segment 10.2 8.1
- PEP 13.3 11.9
- Ackermans 9.9 9.6
- Speciality 8.5 4.2
- PEP Africa^ 26.1 21.3
- Avenida^ 12.1 (1.8)
Furniture, appliances and electronics segment
- Lifestyle 9.2 6.3
^ Constant currency sales growth.
Group merchandise sales (sales) increased by 10.0% for the period, and like-for-like sales
increased by 7.8% supported by the following:
- In southern Africa (excluding PEP Africa and Avenida), like-for-like sales increased by
9.6%.
- Outside southern Africa (PEP Africa and Avenida), like-for-like sales increased by 6.0% in
constant currency but decreased by 11.0% in rand terms.
Group cash sales increased by 7% and credit sales increased by 29%, driven by the group's retail
credit strategy. The overall group credit sales mix increased to 15% from 13% in the prior year.
Retail selling price inflation in PEP, Ackermans and Speciality (in aggregate) amounted to 6.1%
for the period.
Retail space increased by 2.1% year-on-year and included 168 new store openings, including 32
Ayana stores (79 net), expanding the total store footprint to 5 978 stores.
Market share was expanded based on independent South African data*** showing that Pepkor
accounts for:
- nearly two out of every three baby wear sales;
- one out of every two kids wear sales;
- more than three out of four school wear sales; and
- eight out of 10 prepaid cellular handsets – an improvement from seven out of 10 in the
previous year.
*** Retailers' Liaison Committee (RLC) 12mma and Growth from Knowledge (GfK) March 2025 data
Based on this, Pepkor continues to play a critical role in clothing families, improving homes, and
connecting the South African nation.
PEP delivered stellar performance with like-for-like sales growth of 10% and above for six
consecutive months during the reporting period. Market share was expanded across all product
categories and 43 new stores were opened, expanding the store base to 2 649 stores.
Ackermans continued to advance its recovery, with like-for-like sales growth of close to 10%.
Market share was gained in the babies, kids (including CUBE) and womenswear categories, and
the store base was expanded to 1 018 stores, with 19 new stores opened.
In Speciality, Tekkie Town showed a marked improvement in like-for-like sales growth, with
weaker results in Shoe City. Refinery Junior continued to perform well, and the Ayana brand was
successfully launched. The Speciality store base was expanded to 972 stores.
Lifestyle delivered solid and consistent performance during the period with 6.3% like-for-like sales
growth, outperforming the market across a number of key product categories (GfK). Strong trading
momentum continued in Home, supported by improved product ranges, in addition to increased
consumer spending power as a result of the two-pot retirement system. Trading in Tech recovered
in the second quarter.
Outside southern Africa, trading momentum remained strong in PEP Africa, despite significant
trade disruptions in Mozambique in the first quarter. Currency devaluation impacted results in
rand terms.
In Brazil, the operating environment remains challenging with high inflation and interest rates
contributing to customer indebtedness. Despite this, targeted interventions in merchandise,
product allocation and distribution capability contributed to improved like-for-like sales
performance in the second quarter with positive growth restored in the base stores. Store
expansion was deliberately slowed to 12 new stores opened during the period, allowing time to
refine the business model to better capture the long-term growth opportunity in this high-potential
market.
FINTECH
Healthy growth in fintech – enabled by the group's retail core
The FinTech segment continued to deliver healthy growth, underpinned by strategic execution
and extensive reach across all channels, which provided unparalleled customer acquisition
capabilities. FinTech revenue increased by 34.5% to R7.9 billion.
Financial services
Revenue from financial services increased by 67.3% to R3.4 billion, driven by the group's credit
interoperability, connectivity and insurance strategies.
The group's retail credit strategy expanded the A+ retail credit base to 3.1 million customer
accounts with 564 000 new accounts opened during the period. The group's interoperability
strategy saw a further increase in customer cross-shopping behaviour across Pepkor's South
Africa-based Clothing and general merchandise (CGM) brands.
Cellular market share expanded further, with the group now selling eight out of every 10 prepaid
handsets in South Africa (GfK). The newly developed FoneYam smartphone rental product has
been highly successful, enabling more than 1.5 million customers to acquire smartphones by
solving previous affordability barriers. FoneYam also made a meaningful contribution to group
profitability during the period.
The group's insurance business, Abacus, expanded its embedded and bundled product offerings
by successfully integrating and leveraging its capabilities across the group. The group's retail
store footprint remains a powerful distribution platform – the widest in South Africa – driving
efficient customer acquisition and supporting recurring revenue growth.
Omnichannel
- Digital channels
Group online sales increased by 18% and by 30% in the CGM segment, driven by strong growth
in Ackermans and Speciality.
The +more customer value platform, launched in March 2024, remains in its early stages,
presenting a substantial opportunity to deepen customer engagement and convert digital attention
into meaningful commercial relationships. +more now includes nearly 10 million members and
engagement indicators continue to improve on a monthly basis.
- Informal market
The Flash business increased throughput by 23.6% to R28.8 billion, driven by the growth and
resilience of the informal economy and its ability to develop fintech solutions that digitise cash
and empower customers to transact seamlessly, no matter where they are. The group's footprint
in the informal market economy continues to expand, with 175 000 traders delivering customer
solutions that promote financial inclusion.
STRATEGIC DEVELOPMENTS
1. Entering new customer segments
The acquisition of Choice Clothing (Choice) was announced 26 November 2024, concluded in
May 2025 and will be implemented from 1 June 2025. This will allow the group to enter the
emerging semi-formal off-price customer segment. Choice operates 107 stores and has the
opportunity to expand to more than 300 stores.
2. Expanding and scaling the group's Home Lifestyle business
The acquisition of Shoprite's furniture business announced on 3 September 2024 will add c. 400
stores to the Lifestyle business's store base of 922 stores. This will enable expansion of its value
proposition through a complementary product mix in furniture, bedding, appliances and consumer
electronics, while also expanding its presence in under-represented regions.
Key synergies and efficiencies to be unlocked through improved scale include supply chain,
logistics and financial services,capitalising on Lifestyle's leading capabilities and best-of-breed
scalable integrated systems and data-driven capabilities.
3. Expanding market share in adult wear
The group has a stated ambition to expand its underindexed market share in adult wear through
organic and acquisitive growth strategies. The standalone Ackermans womenswear format was
successfully transitioned to Speciality, the group's adult wear-focused business. It was
relaunched as the newly developed Ayana brand across 32 stores at the end of February 2025.
The acquisition of Legit and other businesses from Retailability was announced on 25 March
2025. This proposed acquisition will add c. 462 stores to Speciality's 972 store base and expand
its market share in adult wear. Opportunities to unlock value in sourcing, supply chain and back
office functions have been identified, in addition to leveraging group capabilities in credit and other
financial services. In addition, the Choice format further enhances Pepkor's presence in the adult
wear market.
OUTLOOK
Trading momentum continued into the second half of the year. Winter weather materialising in
May 2025 benefited CGM brands and trading has been satisfactory in Lifestyle. Avenida
continued its positive trajectory with improved trading in base stores, as well as improvement in
key value item sales.
Amid the current uncertain global tariff environment, South Africa potentially stands to benefit
from increased global product supply capacity. In line with the group's disciplined approach to
maintaining consistent gross profit margins in retail brands such as PEP and Ackermans, any
benefits realised will be reinvested in price and value – benefiting customers and further
strengthening their customer value proposition. The South Africa and Brazil macro environments
remain challenging with a muted South African economic landscape.
Pepkor's business model and strategy remain focused on identifying, executing and monetising
customer needs through:
- the sustained performance of existing traditional retail brands;
- execution of core strategic growth levers, including the integration of the acquired
businesses; and
- disciplined cost management.
The group is well on track to open between 250 and 300 new stores in FY25.
With a solid foundation and clear strategic growth levers in place, Pepkor is well-positioned to
outperform general market conditions and drive sustained value creation for shareholders.
Results webcast
A webcast of the results presentation will be broadcast at 10:00 am (SAST) on Tuesday, 27 May
2025. The webcast registration link is https://www.corpcam.com/Pepkor27052025 and can be
accessed on the Pepkor website: www.pepkor.co.za.
Short-form announcement
This short-form announcement (this announcement) is the responsibility of the directors. It should
be noted that this announcement is only a summary of the information contained in the detailed
announcement and therefore does not contain full or complete details.
Any investment decisions by investors and/or shareholders should be based on the information
in the detailed announcement. The detailed announcement can be accessed at
https://senspdf.jse.co.za/documents/2025/jse/isse/pphe/HY25.pdf
Parow
27 May 2025
Equity and Debt sponsor
Investec Bank Limited
Corporate Broker
Rand Merchant Bank (a division of FirstRand Bank Limited)
Date: 27-05-2025 07:30:00
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