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Pep in its step

Pep in its step

In the six months to end December 2013 Pepkor – which is still aligned to founder and Cape tycoon Christo Wiese - reported that low cost fashion retailer Pep opened 51 new stores to bring its store numbers countrywide to 1528.

The slightly more upmarket Ackermans opened another five stores in the interim period to bring its store numbers to 534.

While Pepkor is enjoying rapid growth in markets outside SA (as far a field as Eastern Europe,) Pep very much remains the growth engine for the company with sales up 14% to R6,9bn. Ackermans remained fairly sprightly too with sales up 11% to R2,9bn.

This growth helped underpin a magnificent 46% jump in Pepkor’s profit after tax to over R1bn in the interim trading period.

Pepkor directors cited favourable pricing points and a defensive cash sale offering with wide access to low income mass market as the main factors in Pepkor’s continued success.

Pepkor’s footprint is now of astounding breadth. Total retail space was up 12% to almost 1,6m2, and total retail outlets – including smaller formats like Shoe City, John Craig, Dunns, JayJays, Flash and Power Sales - was up 5% to 3,311 stores.

In stark contrast to Pepkor’s fortunes, Salt-River-based fashion retailer Rex Trueform – which owns the Queenspark chain - looks set for a dismal year of trading.

A recent trading update confirmed that Rextru would see a continued reduction in both sales and profitability in the second half of the 2013 financial year to end June.

Shareholders were advised that earnings for the trading period would be 160% lower than the 2012 financial year.

While other Cape-based fashion retailers like Foschini and Truworths have endured tougher trading conditions, their respective results were nowhere near as bad as those suggested by Rextru.

Rextru, over the years, has been prone to the odd lapse in performance - but has always recovered its operational composure. Although the lagging proft performance is bound to prompt questions of whether it’s not time for one of the bigger fashion retailers to make an offer to acquire the company.

Empowerment group Brimstone (also featured in this edition) is the biggest shareholder in Rextru, and is well regarded as a value adding equity partner. But Brimstone does not have any board influence at Rextru since the Shub family controls the company through a low voting N-share arrangement and a pyramid holding company.


 By Jenni McCann

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