Pepkor delivered strong results in 1H25, driven by sustained performances in the Clothing and General Merchandise segment. PPH continued its strong store rollout in this segment, which only supplemented the solid like-for-like sales figures achieved. Management is expected to roll out a net of 100 more stores in 2H25. However, this is likely to be concentrated in South Africa as PPH is taking a cautious approach to Brazil.
The Choice Clothing acquisition was implemented on 1 June 2025. This is not expected to make a significant contribution, but it does diversify PPH’s apparel profile with more adultwear. The acquisition of the three apparel Retailability brands also provides the Speciality segment with further gains in the adultwear category, along with a significant footprint in South Africa and neighbouring countries. This acquisition will likely conclude only in FY26.
The Pepkor Lifestyle business performed well from a top-line perspective, but both GPM and OPM were softer, due to rising costs associated with store rollouts. We do not anticipate significant store growth in this segment, as the group awaits the conclusion of the SHP Furniture acquisition, which would add significant scale to this segment. This acquisition is expected to be implemented from 2H25, with PPH already procuring IT equipment to avoid delays in integrating SHP Furniture with Pepkor Lifestyle.
FinTech continued its strong performance, with revenue rising 34.5% y-y. The group’s credit interoperability strategy continues to drive sales in the retail business, and the demand for FoneYam necessitated further investment in that book and investment in widening the portfolio of handset devices. It is expected that the FoneYam book will continue to grow, but PPH has stated that growth of the other credit books will slow. This should benefit earnings, in our view. The additional retail chains from acquisitions could, in our view, also be integrated into the group’s credit interoperability strategy.