May 28, 2024
Top Africa Clothing Retailer Pepkor to Bolster Brazil Expansion
, Bloomberg News
(Bloomberg) -- Pepkor Holdings Ltd. plans to almost double its previous target of opening 50 outlets a year in Brazil as Africa’s largest clothing retailer pushes for faster growth in South America.
The company’s Grupo Avenida S.A is on track to unveil 26 stores in the six months through the end of September, adding to the 22 shops opened in its first-half, Chief Executive Officer Pieter Erasmus said in an interview Tuesday after the earnings report. That may double in the next financial year, he said.
“The customers in Brazil are responding exceptionally well,” Erasmus said. “Every store that we open we are exceeding our targets.”
Avenida’s contribution to sales accounted for 5.5% of Pepkor’s revenue, up from 4.4% a year earlier. The retailer sees opportunity to open as many as 600 outlets in Brazil in the next five to seven years and has identified three other possible countries in the region, even as far as Mexico, he said.
In its home market, Pepkor which own South African chains Ackermans, Pep and Tekkie Town is repositioning its women’s clothing with plans to open about 50 standalone stores in the summer, to counter intensifying competition from both international fast-fashion brands such Shein and Temu as well as local retailers such Shoprite Holdings Ltd., which also opened a specialist clothing unit.
Pepkor reported a 9.5% increase in its first-half revenue. A recovery in Ackermans due to more items sold at full price and cheaper shipping rates, helped push the company’s retail sales 8.6% higher. Meanwhile revenue from the its fin-tech unit rose 25% and now contributes 13% Pepkor’s total sales, as it rapidly expands sales of affordable mobile phones at its stores.
Pepkor shares dropped as much as 1.8% in Johannesburg, bringing it’s decline to 6.3% this year.
The discount clothing retailer, which started operations 100 years ago in rural South Africa and now has 5, 823 stores in nine African countries and Brazil, previously had exposure in eastern Europe through Pepco Group N.V..
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