TRADING UPDATE FOR THE THREE MONTHS ENDED 31 DECEMBER 2021
Revenue for the quarter ended 31 December 2021 increased by 1.3% to R22.8 billion. Excluding
the disposal of John Craig in the prior year revenue increased by 1.8%. Growth in revenue was
impacted by the strong base in the comparable quarter in the previous financial year and 161
looted stores that had not yet reopened at the start of the quarter following the civil unrest
in Kwa-Zulu Natal and Gauteng during July 2021. Lower revenue in the Fintech segment resulting
from a change in product mix and accounting treatment further weighed on group revenue growth.
From a trading perspective and excluding John Craig, Pepkor achieved 3.1% sales growth for the
quarter, contending with an exceptionally strong base in the prior year. Over a two-year period
compared to the comparable quarter ended 31 December 2019, the group is pleased to have
achieved sales growth of 10.9%. This demonstrates Pepkor’s ability to achieve strong and
consistent sales growth despite volatile trading conditions.
Whilst trading was weak in October 2021, it normalised in November 2021 and strengthened in
December 2021. The improved trading trajectory is very encouraging in contrast to the
challenging operating conditions faced in the wake of a weak economy with record high levels of
unemployment.
Excluding John Craig, cash sales for the group increased by 3.2% and contributed 93% to total
group sales. Credit sales increased by 2.8% and remains a very small contributor to group sales,
at only 7%. The group’s approach to credit granting remains conservative.
The group has now reopened 450 (82%) out of the total 549 stores affected by the civil unrest.
The reopening of the remaining 99 stores is delayed by infrastructure and shopping centre
rebuilds. The resultant insurance claims process relating to material damage and business
interruption is progressing with further payments from the insurers expected during the current
financial year.
It should be noted that sales growth performance reported per business is adjusted for the
disposal of John Craig by Pepkor Speciality, PEP Africa’s exit from Uganda and the rationalisation
of non-core businesses of The Building Company. Like-for-like sales growth reported excludes
looted stores not reopened by 30 September 2021.
Clothing and general merchandise
The clothing and general merchandise segment increased revenue by 2.0% to R15.1 billion for
the quarter. Excluding John Craig revenue increased by 2.7%.
Sales performance in PEP and Ackermans was affected by negative growth in cellular compared
to an extremely strong base in the comparable quarter when handset sales increased by more
than 20%.
PEP and Ackermans opened 79 new stores during the quarter, exceeding its store expansion
plans. Retail selling price inflation in the clothing, footwear and homeware (CFH) product
categories approximated 5.1%.
In Rand terms, PEP Africa increased sales by 2.4% supported by strengthening local currencies.
In constant currency terms, sales declined as a result of varying levels of COVID-19 related
trading restrictions in countries of operation.
The Speciality division achieved good growth with all the brands performing well and trade
strengthening towards the end of the quarter.
The Tenacity credit book, which facilitates sales in the clothing and general merchandise
segment, increased marginally to R3.3 billion from R3.2 billion a year ago (on a gross basis). The
level of non-performing loans improved.
Sales growth Like-for-like sales Total sales growth Total sales growth
performance growth for the for the quarter for the quarter
quarter Year-on-Year Over 2 Years
Year-on-Year
PEP and Ackermans 1.6% 2.4% 11.5%
PEP Africa (constant (0.1%) (2.4%) 3.1%
rates)
Speciality 5.3% 5.2% 19.9%
Furniture, appliances and electronics
This segment delivered strong growth against a high base with revenue growth of 9.7% to R3.4
billion for the quarter. Black Friday and Christmas trading in the JD Group was strong despite a
high base in the comparable quarter last year.
The Connect credit book, which facilitates credit sales in the JD Group, was largely maintained at
the R1.6 billion-level (on a gross basis). The level of non-performing loans improved.