Pepkor Holdings Ltd. climbed to the highest in three years as Africa’s largest clothing retailer declared a dividend that beat analysts’ estimates and the group outlined a expansion plans that include as many as 300 new stores.
In Pepkor’s home market of South Africa, consumers’ disposable income is improving as food inflation has slowed and as changes to the retirement system have allowed more access to savings. Fewer power outages have also improved growth and confidence, while Pepkor has ensured better stock despite delays at the country’s ports.
“Out of my five or six cycles of reporting, this is the one I feel the most optimistic about,” chief executive officer Pieter Erasmus, known for his measured outlook, said in an interview Tuesday. He was CEO of the Cape Town-based company for 16 years and said the current environment is the best since he returned to the position in 2022.
The stock rose as much as 7.9 percent in early trade to 26 rand, the highest intraday price since Nov. 11, 2021. Pepkor declared a full-year dividend of 0.485 rand a share and said sales in the seven weeks through Nov. 16 showed a strong improvement.
Pepkor, which owns South African chains Ackermans, Pep and Tekkie Town, also plans to grow women’s clothing, although it will weigh acquisitions against intensifying competition from both international fast-fashion brands like Shein and Temu as well as local retailers such as Shoprite Holdings Ltd., Erasmus said. The 250 to 300 outlets that will open across its brands in the new financial year will be “quite widely spread,” he said.
The sale of affordable mobile phones is also expanding rapidly, with demand outstripping supply. Pepkor sells about 1 million devices a month, with about 20 percent of those being its own brand. It’s also built its phone rentals from zero a year ago to 1 million contracts.
“A bigger portion of people are able to afford smartphones and we are able to finance it for them,” he said. “That’s a massive growth opportunity.”
The company’s Grupo Avenida SA unit in Brazil, which accounts for about 5.3 percent of revenue, opened 42 new stores and a second distribution centre. While Pepkor will stick to the states in which it currently trades, it plans to add more than 60 outlets in the next year, Erasmus said.
By Janice Kew
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Top Africa Clothing Retailer Pepkor to Bolster Brazil Expansion
CEO Pieter Erasmus sees opportunity to open as many as 600 outlets in Brazil in the next five to seven years and has identified three other possible countries in the region, even as far as Mexico.
