Pepkor recognises R2.7bn of impairments for 2024 financial year

Pepkor Holdings, SA’s largest retailer by store footprint, expects full-year headline earnings per share (HEPS) to be as much as 6% lower to 4% higher as it recognises impairments of R2.7bn for the year.

However, it said in a statement on Wednesday that based on the group’s strong operating performance, cash generation, successful strategic execution and healthy financial position, the impairment would be disregarded in the consideration and determination of the 2024 financial year dividend.

Pepkor expects HEPS for continuing operations for the year to end-September to be between 132.5c and 146.5c from the previous year’s 140.8c.

Normalised HEPS on a 52-week basis are seen 5%-15% higher. The previous year included 53 trading weeks for SA-based clothing and general merchandise brands.

Group revenue for continuing operations increased by 7.8% to R85.1bn. On a comparable 52-week basis, group revenue increased by 9.2%.

Pepkor said its clothing & general merchandise segment grew revenue by 5.2% to R61.4bn and the furniture, appliances & electronics segment’s revenue was 4.5% higher at R11bn.

Its retail operations delivered strong trading results and captured additional market share in clothing, cellular and home, notwithstanding a challenging operating environment.

The fintech segment increased revenue by 26.8% to R12.7bn.

“The group’s powerful customer acquisition capability within its retail operations enabled rapid growth in fintech through strategic execution in financial services and mobile connectivity,” it said.

The disposal of The Building Company (TBCo) was implemented on September 30, which enabled the group to exit the building materials market and deliver on its objectives to streamline the portfolio of businesses, enhance return on capital and optimise shareholder returns.

TBCo is classified as discontinued operations in the group’s results.

The outcome of the annual impairment assessment process on goodwill, trade and brand names with an opening carrying value of R51.2bn, as required by International Financial Reporting Standards (IFRS), resulted in a total impairment of R2.7bn to be recognised in 2024 financial year.

The key factors for the impairment include the continued uncertainty of trading in the retail market driven by performance in Ackermans, which continues to recover, and a challenging footwear market affecting performance in Tekkie Town and Shoe City resulting in a cautious outlook.

The impairment affected earnings but would be excluded from headline earnings, it said.

Pepkor’s full-year results will be published on November 26.

mackenziej@arena.africa