Know your Brands: Pepkor Holdings Limited

It's back-to-school, and during these times, consumers visit stores like PepStores. In fact, Pep is one of South Africa’s largest single-brand retailers and also forms part of the Pepkor portfolio.

Pepkor Holdings Limited stands as a retail giant, proudly boasting the largest store network in southern Africa. With a vast footprint of 5,830 stores spanning 10 African countries and Brazil, the company has become synonymous with trusted brands that have shaped the retail landscape on the continent. Operating predominantly in the discount and value market segment, Pepkor's success story is deeply rooted in its ability to understand its diverse customer base and cultivate lasting relationships over the span of a century. 

Over the years, Pepkor has strategically expanded its reach, solidifying a significant presence in southern Africa and selectively venturing into other African economies. The majority of its retail brands are primarily focused on providing economical and budget-friendly options, a niche that boasts of resilience and flexibility, allowing customers to tailor their purchases to fit fluctuating financial circumstances and prevailing economic conditions.

Disclaimer: The brands may not be limited to the logos on the image and may change. The use of logos are for educational purposes only.

Its retail brands include PEP, Ackermans, Shoe City, Tekkie Town, Refinery, CODE, Bradlows, Sleepmasters, Incredible Connection, HiFi Corp, and more! 

The retail segments include: 

• Clothing and general merchandising 
• Furniture, appliances and electronics 
• Building Materials 
• and FinTech 

According to the company, the clothing and general merchandising segment, along with Tenacity Financial Services, drives a significant portion of Pepkor’s revenue and profit. Tenacity Financial Services supports CFH (clothing, footwear and homeware) brands (excluding PEP Africa) by providing revolving credit facilities to customers.

Financials, share buybacks and dividends

With strengthened trading in FY23, supported by a 53rd trading week in South Africa, the company gained market share in key categories. Robust cash generation of R13.0 billion, a 15.9% YoY increase, was achieved through impeccable working capital management. Growth in Brazil was accelerated by increased capital allocation to Avenida, positioning it as a discount retailer. Despite R5.5 billion headline earnings meeting expectations, elevated debtors’ costs impacted the results. The South African credit strategy raised the group credit sales mix to 10%, showcasing financial resilience. Here are the full results.

The group bought and cancelled 27.8 million ordinary shares on the JSE, spending R511 million on share buybacks. Pepkor pays dividends annually, and it is currently preparing to pay the 2023 financial year (FY23) dividend, with the last date to trade being 16 January 2024. 

Are they expanding? 

There are several reports that Pepkor intends to acquire Edgers for R2.4 billion, although no official announcement was made by the company. The reports came after it acquired Avenida in 2022, which enabled the company to expand into the Latin American economy. 

The CEO said: “The combination of Avenida and Pepkor brings together the required capital, retail synergies and the collective know-how to bolster Avenida’s growth in years to come. I believe that together we will be able to build and grow Avenida to become a giant in Brazilian value retail.” 

Avenida dominates Brazil's low-end retail with 130 stores, targeting a vast population of around 212 million, offering significant growth opportunities, as it intends to open 50 stores a year. 

Earnings 

Pepkor Holdings Limited is expected to release its earnings in November 2024. To invest in Pepkor Holdings Limited, you can click here or head over to your EasyZAR account.