Pep and Ackermans give Star a boost
CEO Ben la Grange says real market growth is likely to be subdued, but positive sales momentum is expected to continue as the company’s more affordable offer resonates with constrained consumers
Star, the JSE-listed holding company of Pep, Ackerman and other retailers unbundled from Steinhoff on September 20, released its first financial results as a standalone group on Monday morning.
"As communicated during the listing process, Star was only listed for 11 days during the 2017 financial year and thus no further dividend will be declared for the reporting period," the company said in its statement.
Star’s first results compare 12 months against 15 months because it changes its financial year end to September from June.
Comparing the year to end-September 2017 against the matching period in 2016, Star said its revenue grew 13.2% to R58.6bn.
"Revenue growth was largely attributable to Pep and Ackermans, which, in aggregate, account for 85% of the discount and value division’s revenue," Star CEO Ben la Grange said in the results statement.
"Like-for-like revenue growth of 6.5% was achieved by Pep and Ackermans in aggregate, influenced by a weaker fourth quarter. Within product categories, kids’ wear and cellular delivered standout performances. Home, adult wear and fast moving consumer goods also supported growth."
The group’s stores outside SA in Botswana, Lesotho, Namibia and Swaziland contributed 5% of its revenue. Exchange rate volatility slowed its expansion into Angola.
Star’s revenue declined 5% if compared with the 15 months in the comparable period, but after-tax profit nearly tripled to R3.6bn from R1.3bn. Headline earnings per share (HEPS) grew 121% to 133.6c for the 12 months from 60.4c for the 15 months.
La Grange said the group intended to open 350 stores during its 2018 financial year.
During the reporting period, it opened a net 272 stores.
About 300 "uneconomical trading locations" were closed, while the acquisition of Tekkie Town added 308 stores to the group’s footprint. As at September 30, Star traded from 4,953 retail locations.
"While real market growth is expected to be subdued, positive sales momentum is expected to continue as Star’s more affordable offer and lower prices resonate with a constrained consumer," La Grange said.