Pepkor showcases growth across its portfolio

4 Jun 2025

Pepkor Holdings Limited has announced strong interim results for the six months ended 31 March 2025, showcasing robust growth across its portfolio.

Group revenue increased by 12.8% to R48.8bn, while operating profit grew by 13.3% to R5.8bn.

Normalised headline earnings per share (HEPS) saw a significant increase of 18.9% to 84.3 cents, underpinning the group's ability to deliver value in a dynamic market.

Pieter Erasmus, chief executive officer of Pepkor Holdings Limited, said, “We have delivered consistent retail performance, strategically executed on our fintech growth ambitions, and maintained disciplined cost management. Our focus on digital and financial inclusion yields tangible benefits for our customers and the group’s performance.

Image supplied

We are particularly pleased with the progress in our fintech segment and our expanding cellular market share, which are becoming increasingly significant contributors to our overall success.

Strategic acquisitions announced will further diversify our offering into new customer segments and product categories - positioning Pepkor for sustained growth and value creation.”

Financial highlights for the six months ended 31 March 2025:

Revenue increased by 12.8% to R48.8bn

Operating profit (before capital items) grew by 13.3% to R5.8bn

Gross profit margin expanded by 110 basis points to 39.2%.

Normalised HEPS increased by 18.9% to 84.3 cents (Statutory HEPS: +12.4% to 84.3 cents).

Cash conversion remained strong at 82% (rolling 12-month basis).

Return on net assets was robust at 23.7% (rolling 12-month basis).

Retail credit A+ customer base grew to 3.1 million accounts, with 564,000 new accounts opened.

Cellular market share expanded, with the group now selling eight out of every 10 prepaid handsets in South Africa.

FoneYam smartphone rental customers exceeded 1.5 million.

Active SIM card base, based on SIM cards sold by the group, of 30 million.

Strong performance across core retail operations

Pepkor's traditional retail businesses delivered a strong trading performance, outperforming the market and expanding market share.

Group merchandise sales increased by 10%, with like-for-like sales up by 7.8%. In Southern Africa (excluding PEP Africa and Avenida), like-for-like sales grew by an impressive 9.6%.

This performance was supported by improved product availability, healthy growth in retail credit interoperability, and solid growth in cellular connectivity.

Pep, the group's largest brand, delivered a stellar performance with like-for-like sales growth of 10% and above for six consecutive months. Market share was expanded across key product categories, and 43 new stores were opened, bringing the total to 2,649 stores.

Ackermans continued its recovery trajectory with like-for-like sales growth of close to 10%. Market share was gained in key categories and the store base expanded to 1,018 stores.

Image supplied

Speciality (including Tekkie Town and the newly launched Ayana brand) showed solid performance in Dunns, Refinery and CODE with improved trading in Tekkie Town. The Ayana brand, focused on adult womenswear, was successfully launched across 32 stores. The Speciality store base expanded to 972 stores.

Pepkor's fashion chain Ayana aims for hundreds of stores in SA

Nqobile Dludla 3 days

Lifestyle (including Rochester, Bradlows, Sleepmasters, and Incredible Connection) delivered solid and consistent performance, with 6.3% like-for-like sales growth, outperforming the market in key product categories.

Avenida, Pepkor's Brazil-based operation, saw an improvement in like-for-like sales performance in the second quarter despite a challenging environment.

Fintech continues to drive growth and financial inclusion

The fintech segment delivered healthy growth, underpinned by strategic execution and extensive reach across all channels, providing unparalleled customer acquisition capabilities.

Connectivity: Pepkor sold 6.8 million cellular handsets during the period, an increase of 17%, and its market share in prepaid handsets rose, now accounting for eight out of every 10 prepaid handsets sold in South Africa. Smartphone penetration increased as the group made these devices more affordable, with smartphones constituting 65% of handsets sold.

FoneYam, the innovative smartphone rental product, continued its strong growth trajectory, enabling more than 1.5 million customers to acquire smartphones by overcoming affordability barriers. Monthly activations averaged 165,000.

Retail credit: The A+ retail credit base expanded to 3.1 million customer accounts, with 564,000 new accounts opened.

Insurance (Abacus): During the period, 3.3 million PAXI parcels were covered, and embedded insurance was successfully launched in FoneYam in November 2024, covering 840 000 devices since then.

Flash: The Flash business, serving the informal market, increased its throughput by 23.6% to R28.8 billion. The trader network expanded to 175 000, delivering customer solutions that promote financial inclusion.

Erasmus said initiatives like FoneYam are not just about selling products; they provide access and opportunity. “By making smartphones affordable, we connect more South Africans to the digital economy and enable access to education and essential services.”

Strategic developments pave the way for future expansion

Pepkor also made significant strides in executing its strategic growth ambitions, with key acquisitions and initiatives to enhance its market position and customer offering.

Erasmus said, “These developments are transformative for Pepkor. The acquisition of Choice Clothing opens a new, exciting customer segment. Bringing Shoprite's furniture business into our Lifestyle division will bring increased scale and synergies into the household goods market. And our focused efforts in adult wear, through the Ayana launch and the Retailability acquisition, will substantially increase our presence in this product category.”

Legit, Swagga, Style and Boardmans sold to Pepkor

3 Apr 2025

Pepkor says these acquisitions will leverage the group’s core strengths and deliver enhanced value to its customers and shareholders.

Positive outlook and strategic focus

Pepkor remains optimistic about the future despite a challenging macroeconomic environment in South Africa. The group anticipates that downward-trending inflation, reduced load shedding, and the two-pot retirement system will provide some relief for consumers.

Erasmus concluded, “Despite the subdued and competitive market, we continued to deliver excellent growth and we're confident that our consistent performance and growth in fintech will continue to underpin strong performance.”