Business Maverick


Pep in their step: Mr Price and Pepkor grow market share as South Africans shop for a bargain

Pep in their step: Mr Price and Pepkor grow market share as South Africans shop for a bargain
(Photo: Gallo Images / Papi Morake)

Mr Price and Pepkor have been big beneficiaries of a weak economy exacerbated by the Covid-19 pandemic. Although sales over the past year have been affected by the lockdown, both retail groups have been quick to recover as consumers shopped down to match their shrinking wallets.

Mr Price, which also owns the Miladys and Sheet Street chains, grew its share of the market by 150 basis points in the year to 3 April, according to the Retailers’ Liaison Committee (RLC). That’s the equivalent of R1.2-billion in additional sales. While the group gained market share every quarter, it says clothing division Mr Price Apparel gained market share every month, supported by a 64% improvement in online sales, which still remain tiny compared with sales at its physical outlets. 

Unsurprisingly, the second half of its financial year was significantly better than the first, when it lost an entire month of trading in April 2020 during the Level 5 lockdown, costing it an estimated R1.8-billion in lost sales. 

While full-year retail sales fell 2.4% to R21.2-billion and headline earnings per share declined by 2.8% to 1,000.5c on a comparable 52-week basis, sales accelerated by 8.5% in the second six months, while diluted headline earnings per share jumped 13%. After incurring R35-million of additional costs due to Covid-19, it still more than doubled its annual dividend to 672.8c per share. It didn’t pay a final dividend last year. 

“These results are commendable when you consider that we were forced to close all stores in April 2020 and yet maintained profitability at a similar level to the previous year,” CEO Mark Blair said. 

“The group’s calculated investment into its online offering over the last nine years continues to generate profitability, particularly in a year where this channel’s importance to customers significantly increased.” 

While Mr Price aims to be the most valuable retailer in Africa under a growth strategy outlined last November, it still lags supermarket giant Shoprite and rival retailer Pepkor.

Like Mr Price, Pepkor has also grown its share of the clothing, footwear and homeware markets, by 296 basis points, according to RLC data.

Interim results for the six months to 31 March show an 8.1% rise in revenue to R36.5-billion. Operating profit improved by 19% to R4.6-billion and headline earnings per share jumped 51% to 68.8c as trading recovered from the initial impact of Covid-19 and its interest bill fell as it used strong cash generation to reduce debt while benefiting from last year’s interest rate cuts. 

Apart from strong performances at Pep and Ackermans, Pepkor’s Speciality business, which includes the Tekkie Town, Refinery, Dunns and Shoe City chains, benefited from demand for casual wear and branded footwear,

The Steinhoff subsidiary also did well from rising sales of furniture and electronics as South Africans kitted out home offices and studies due to the work-from-home trend. Revenue at its JD Group division, which includes a number of furniture chains as well as HiFi Corp and Incredible Connection, jumped 12.8% to R5.7-billion.

The quality of the performance during the period is further highlighted by the fact that businesses had to deal with volatile operating conditions during the second wave of the coronavirus pandemic and disruptions caused by the delayed start to the academic school year,” Pepkor said. BM/DM


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