Trading Update For The Three Months Ended 31 December 2018
Pepkor Holdings Limited
(Previously Steinhoff Africa Retail Limited)
(Incorporated in the Republic of South Africa)
(Registration number: 2017/221869/06)
Share Code: PPH
(“PEPKOR” or the “Company”)
TRADING UPDATE FOR THE THREE MONTHS ENDED 31 DECEMBER 2018
In a challenging trading environment the Pepkor group increased revenue by 6.1% to
R19.5 billion for the three months ended 31 December 2018.
Clothing & general merchandise
The clothing and general merchandise segment reported sales growth of 6.1% and like-for-like
growth of 3.4%. Retail space increased by 4.0% compared to the comparative quarter.
The Pep and Ackermans brands in aggregate reported sales growth of 6.8% and like-for-like
sales growth of 2.7%. Core clothing, footwear and homeware (CFH) product categories
achieved 8.6% sales growth and 4.6% like-for-like growth which is very encouraging in the
current operating environment. Pep and Ackermans in aggregate reported inflation of 1.6% in
CFH retail selling prices.
Notwithstanding a decline in sales of 4.8% in rand terms as a result of currency devaluation
and poor performance in Zimbabwe, Pep Africa reported a markedly improved performance
in constant currency with sales growth of 18.7% and like-for-like growth of 13.3%. This was
supported by improved performance in Angola, Zambia and Nigeria.
The Speciality division reported sales growth of 7.3% with like-for-like growth of 3.0% in
aggregate. Satisfactory performance was achieved in the clothing product categories with
continued softer performance in footwear.
Furniture, appliances & electronics
The furniture, appliances and electronics brands reported sales growth of 0.6% and a decline
in like-for-like sales of 2.7% as the spending patterns of financially constrained consumers favour
essentials as opposed to durable product categories.
Sales growth of 2.3% was achieved in the building materials segment with like-for-like growth
of 3.5% while retail space reduced by 1.3%. Performance was supported from a wholesale
perspective however, discounting in this highly competitive and contracting market continues
to put margins under pressure.
The FLASH business continues to achieve significant growth, while a satisfactory performance
was reported by the Capfin call centre and debt collection operations. The segment reported
31.3% revenue growth for the quarter.
Overall, Pepkor’s defensive market position and strategy of providing customers with value at
affordable prices, continue to resonate with a financially constrained consumer. It is expected
that these Pepkor fundamentals will continue to support future performance in a very
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
Pep Africa (4.8%) 18.7%
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.
28 January 2019
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