Pepkor Holdings Ltd. posted a drop in first-half earnings because Africa’s largest clothing retailer failed to get the right summer fashion mix.
Net income at the Cape Town, South Africa-based company dropped 11% to 2.98 billion rand ($151 million) in the six months through March, with the company’s core Ackermans unit being the biggest drag on earnings, according to a statement on Tuesday. Revenue rose 4.3% to 43.8 billion rand.
The discount retailer, which started 100 years ago in rural South Africa and now has 5,929 stores in almost a dozen countries, is also facing intensifying competition. Shoprite Holdings Ltd., Africa’s largest grocer, recently opened specialist clothing and baby stores — both categories that Pepkor’s flagship Pep and Ackermans outlets sell.
“Performance in Ackermans was negatively impacted by the suboptimal merchandise mix in its summer 2022 range,” Pepkor said in the statement. “Corrective action was implemented within the confines of product lead times, and improved performance should be visible towards the end of winter and in summer 2023.”
The stock has dropped 24% this year, the biggest decline on the eight-member FTSE/JSE Retailers Index.
Inventory levels increased 12% to 17.3 billion rand as sales slowed at Pep and Ackermans, the company said.
