PEPKOR HOLDINGS LIMITED - PPH : Trading Update For The Three Months Ended 31 December 2019
24 January 2020 14:00

PPH : Trading Update For The Three Months Ended 31 December 2019: 
Pepkor Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2017/221869/06)
Share Code: PPH
ISIN: ZAE000247995
("Pepkor", the "Pepkor group" or the "Company")

TRADING UPDATE FOR THE THREE MONTHS ENDED 31 DECEMBER 2019

The Pepkor group increased revenue from continuing operations by 7.6% to R20.9 billion for the
three months ended 31 December 2019.

The clothing, footwear and homeware (CFH) retail brands successfully defended and
expanded their market shares, according to the latest RLC data.

Continuing operations

Clothing & general merchandise

The clothing and general merchandise segment reported total revenue growth of 5.0% for the
quarter.

The Pep and Ackermans brands in aggregate reported sales growth of 6.4% and like-for-like
sales growth of 3.2%. Sales performance was negatively impacted by a shift in "back-to-
school" trade from December 2019 to January 2020 as a result of the later start to the school
year. This is confirmed by double digit sales growth during the first three trading weeks of
January 2020.

Retail selling price inflation in core CFH product categories increased to 9.1%, driven by
fluctuations in exchange rates. This compares to 1.6% in the comparative quarter and sales
units reduced as a consequence.

Notwithstanding the inflation, both Pep and Ackermans protected their positions as price
leaders in the discount and value markets.

Retail space of Pep and Ackermans expanded by 4.8% compared to the comparative
quarter. New stores are performing in line with expectations and continue to meet feasibility
thresholds.

Pep Africa, which contributes c.3% to group revenue, continued to consolidate amidst
adverse macro-economic conditions across most countries of operation. High levels of
product inflation due to depreciating currencies in Angola, Nigeria and Zambia impacted
consumer affordability. Constant currency sales declined by 2.8% and like-for-like sales
reduced by 6.4%, translating to a decline in sales of 12.7% in rand terms.

The Speciality division reported sales growth of 1.6% with like-for-like sales reducing by 0.6%.
The clothing product categories performed well during the quarter. In the current economic
environment consumers tend first to reduce spending on higher priced products such as
footwear, resulting in a very challenging trading environment for the footwear brands. Tekkie
Town continues to focus on improving stock-holding and other inefficiencies in the business
which continues to impact performance.

Furniture, appliances & electronics

The JD Group reported revenue growth of 3.6% for the quarter.

Retail sales increased by 2.2% while like-for-like sales declined by 0.7%. Credit sales declined to
an overall credit mix of 17.5% compared to the prior year's corresponding 18.1%. Black Friday
promotions were very successful reflecting the price sensitivity of over-stretched consumers.

Building materials

The Building Company reported a decline in sales and like-for-like sales of 4.1% and 2.9%
respectively. Sales performance in the retail division improved during the quarter while
performance in the wholesale and specialist divisions were negatively impacted by the
challenging market conditions in the construction and building materials market.

Fintech

The Fintech segment reported revenue growth of 44.4%. This includes the contribution from
Capfin following the internalisation of its credit book funding which is not included in the
comparative quarter.

The FLASH business increased revenue by 30.9% and continued to invest in new products,
businesses, channels and geographies to complement its informal trader business, which
consists of 170 000 traders.

Capfin reported good results for the quarter. The loan book is healthy with credit performance
meeting expectations.

Outlook

Trading in January 2020 has been relatively stronger in most brands, supported by the shift in
"back-to-school". On a relative basis, Pepkor continues to perform well in context of the
current retail market, underscoring the successful execution of its customer value proposition
and focus on providing value to customers.

The current macro-economic and employment landscape is not expected to improve in the
near future. Pepkor however, remains positive and focused on the execution of its strategy to
provide value to customers, market share expansion and enhancing efficiencies in the
respective divisions.

Impact of Pepkor group's pro forma constant currency disclosure

The Pepkor group discloses unaudited constant currency information to indicate Pep Africa's
performance in terms of sales growth, excluding the effect of foreign currency fluctuations. To
present this information, current period turnover for Pep Africa reported in currencies other
than ZAR are converted from local currency actuals into ZAR at the prior year's actual average
exchange rates. The table below sets out the percentage change in sales, based on the
actual results for the period, in reported currency and constant currency for the basket of
currencies in which Pep Africa operates.
 
 % change in sales compared to the prior period                       Reported       Constant
                                                                      currency       currency


 Pep Africa                                                             (12.7%)         (2.8%)


The information included above is the responsibility of the directors and does not constitute an
earnings forecast and has not been reviewed and reported on by the Company's external
auditors. The constant currency information has been prepared for illustrative purposes only.

Parow

24 January 2020

Sponsor

PSG Capital

Date: 24-01-2020 02:00:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.