- The nonpayment of government’s SRD grants has had a significant impact on discount retailer Pepkor’s sales.
- Its trading was also hit by the flooding of its Isipingo distribution centre during the KwaZulu-Natal floods in April.
- That said, Pep and Ackermans opened 57 new stores during the third quarter, increasing their combined retail store base to 3 505 stores.
Pepkor has seen a “significant” impact from the nonpayment of the Social Relief of Distress (SRD) grants in May and June.
The R350 grants were not paid due to a decision by the Department of Social Development to set a means test for the new phase of the grant. More than five million people qualify to receive the grant.
Earlier this week, Mr Price also said that the lack of grants hit its sales growth.
“The disruption in the payment of SRD grants added enormous pressure on our consumers and it is pleasing that this has been resolved with payments to beneficiaries resumed, including back payments, for the months of May 2022 and June 2022,” Pepkor said in a trading update on Thursday. Still, its revenue grew by 5.1% in the three months to end-June.
The company said its trading was also hit by the flooding of its Isipingo distribution centre during the KwaZulu-Natal floods in April.
Pepkor says trading was volatile in the quarter, with very strong trading in April, a “soft” May followed by a decent recovery in trading during the second half of June. “This recovery strengthened further into July 2022.”
For the nine months to end-June, Pepkor’s group revenue rose by 3.9% to R62.5 billion. Pep and Ackermans saw 2.8% sales growth for the period.
Pep was particularly affected by the floods, which hit its distribution centre in Isipingo, Durban. It suffered more than R1 billion in damage – including disruption of operations. This is fully covered by its insurance. The distribution centre is now at 50% of normal capacity.
Pep and Ackermans opened 57 new stores during the third quarter, increasing their combined retail store base to 3 505 stores.
Pep Africa saw sales growth of 3.7% in the past nine months, while its newly acquired Grupo Avenida business in Brazil saw sales (in rands) increasing by 81%.
This was thanks to the recapitalisation of the business in February, which improved supplies in the stores.
It is expected that Avenida will contribute 2% to group revenue in the current financial year and 4% in the next financial year on a full-year basis. It has a network of 132 stores.
Avenida sells itself as a “one-stop shop” for home, apparel, footwear and cellular products to the average Brazilian family.
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Its household goods and consumer electronics business JD Group saw sales growth of 6.5% in the nine months, but its building materials group The Building Company saw a 1.7% decline.
Its finance business Capfin increased loans by 9.9% to 260 000.
On Thursday, Pepkor’s share price rose by almost 3% to R20.40 – almost exactly the same level as a year ago.