Pepkor sales growth slows due to floods and social grant disruption (updated)
28/07/2022 16:47
(Adds details)
JOHANNESBURG, July 28 (Reuters) - Pep and Ackermans owner
Pepkor Holdings PPHJ.J on Thursday said sales growth had
slowed to 5.1% in the third quarter, due to the non-payment of
COVID-19 social grants to consumers and flooding of a major
distribution unit in KwaZulu-Natal.
The discount fashion and homewares retailer, majority owned
by Steinhoff International Holdings SNHJ.J , had posted sales
growth of 27.9% in the prior year's third quarter as the group
recovered from the COVID-19 lockdown.
The government introduced the so-called social distress
grant in 2020 to help people cope with the economic effects of
the COVID-19 pandemic. This fuelled spending at the discounter's
shops that offer value items to cash-strapped shoppers.
But payment of the grants was disrupted in recent months due
to administrative changes, sending a shockwave through the
retail sector. urn:newsml:reuters.com:*:nL1N2Z916R
Pepkor said problems in the payment of grants had a
significant impact on trading in May and June, which negatively
impacted performance in its clothing division, especially the
Pep and Ackermans chains.
Pepkor said payments had resumed, including back payments.
For the third quarter, sales in Pep and Ackermans stores
inched up by 1.7%.
Trading was also impacted by the flooding of its Isiphingo
distribution centre in April.
"The distribution centre is currently operating at 50% of
normal capacity. This is expected to increase to 80% within the
next month and service levels are almost back to normal," Pepkor
said.
Clothing and general merchandise sales rose by 9.7% in the
quarter. Furniture, appliances and electronics sales increased
by 3.7% against a strong base in the prior year due to pent-up
demand.
Building materials sales fell by 1.9% as the market in South
Africa continued to be constrained.
For the nine months ended June 30 Pepkor said sales rose by
3.9% to 62.5 billion rand ($3.4 billion) versus the comparable
prior year.
($1 = 16.6910 rand)
(Reporting by Nqobile Dludla; Editing by David Evans and David
Holmes)
((nqobile.dludla@thomsonreuters.com; +27103461066;))