Global Courant 2023-05-30 12:41:10
Pepkor says its performance has been negatively impacted by the constrained consumer environment and ongoing tax shedding.
In its interim results for the six months ended March 31, 2023, the group said its customers indicated they needed to prioritize spending on essentials, with high levels of inflation — particularly food and transportation — hurting consumers’ wallets.
In addition, its clients are struggling to earn an income due to disruptions in the subsidy payment system and the economic impact of the divestment.
As a result of load shedding, the group said the number of trading hours lost due to load shedding increased by 500% to 211,000 hours during the period.
While many of the group’s stores were able to trade during the tax break, the inability of other retailers to do so hurt shopping mall trade.
The group’s diesel costs reached nearly R72 million during the period, and it said it is implementing an initiative to mitigate the impact of the power cuts by increasing the share of the group’s store base with alternative power sources to 74%.
In addition, the group is working with property owners to expand alternative flow courses to address the issue of trading hours.
Financially, the group’s turnover grew by 4.3% to R43.8 billion.
However, total earnings per share fell to 80.8 cents
As per Pepkor’s historic dividend policy, no interim dividend has been announced.
Outlook
While the group said trading has improved in May 2023, the business and consumer environment is not expected to improve anytime soon.
Targeted cost-cutting measures have been taken to compensate for the weaker trading performance.
Higher levels of product inflation are also expected in the upcoming summer season as the rand fluctuates.
Despite the difficult economic climate, the group said it would expand its footprint to more than 6,000 stores by the end of the fiscal year.
In addition, the group said it would increase its presence in the casual retail market, its mobile and financial services offerings, and its discount and value proposition in the Brazilian market.
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