Steinhoff’s Pepco books double-digit sales growth amid rapid expansion

Pepco, owner of the discount Pepco and Dealz brands in mainland Europe and Poundland in the UK, has reported double-digit revenue growth for its third quarter to end-June, citing rapid expansion of its store base and a general growth of customer numbers within its target market.

Steinhoff, valued at R11.1bn on the JSE, holds 79% of Pepco, which generates about half its revenue. but it is Pepkor, Africa’s biggest apparel retailer, that has fared better in terms of profit for Steinhoff, something that would help it pay off a debt pile that stood at €10.23bn at the end of its March half-year.

Steinhoff holds 51% of Pepkor, owner of Pep, Incredible Connection and Ackermans, and that retailer grew first-half revenue 9% to €2.42bn, while core profit rose 18% to €427m to end-March, growing market share in many categories.

Pepco posted a 19% jump in first-half revenue to €2.37bn to end-March, benefiting from easing Covid-19 restrictions, but its core profit rose a more sedate 6% to €327m.

Group revenue rose 17.1% to €1.21bn (R20.57bn) in the three months to end-June, Pepco reported on Wednesday. The group opened 109 new stores in the quarter, including 40 in the  European markets of Austria, Italy, Spain and Germany.

Pepco views the store-expansion programme as its biggest driver of value creation and is eyeing 450 new stores for its 2022 year, having opened 350 in the three quarters to end-June, bringing its total to 3,795.

The group said it was also encouraged that the discount market across Europe is now much larger than at the time of the previous financial crisis in 2007-2008, which means that a much larger customer base is more familiar with and more frequently shops in this channel.

“The group has delivered another quarter of good progress and a resilient trading performance, driven by its successful and proven strategy,” CEO Trevor Masters said in a statement.

“We are excited about our expansion plans in Spain as they are the first step on the journey to make the best of the group’s offering available to more customers than ever before. It means we can leverage the benefits of our broader offering across the group, making us even more efficient and effective,” he said.

In afternoon trade, Steinhoff’s share price was up 5.24% at  R2.61, on track for its best day in about a week. The share price almost halved so far in 2022.

gernetzkyk@businesslive.co.za