Steinhoff Investment - Pepkor trading update

This is an extract from the report.
Cape Town, W Cape, SA (August 7, 2019) – Pepkor increased revenue by 8.5% to R53.1 billion for the nine months ended 30 June 2019. Performance was supported by a stronger third quarter which saw revenue grow by 11.7%, largely benefitting from the shift of Easter to April. Trading however, remains volatile in an environment of continued pressure on consumer spending.

Clothing & general merchandise
The clothing and general merchandise segment reported revenue growth of 6.4% for the nine- month period, supported by 9.2% growth during the third quarter.
       For the nine-month period, the Pep and Ackermans brands in aggregate reported sales growth of 6.7% and like-for-like sales growth of 2.9%. Retail space expanded by 4.8% year-on- year. Core clothing, footwear and homeware (CFH) product categories achieved 7.1% sales growth and 3.5% like-for-like growth. This remains encouraging in the current operating environment. Pep and Ackermans in aggregate reported inflation of 4.2% in CFH retail selling prices.       Pep Africa reported a decline in sales of 0.7% in rand terms for the nine-period. This includes strong constant currency performance with sales growth of 14.9% and like-for-like growth of 11.4%. Good results were achieved in most countries while macro-economic challenges in Zimbabwe continue to impact performance.
       The Speciality division reported sales growth of 9.5% with like-for-like growth of 4.2%, in aggregate, for the nine-month period. Satisfactory performance was achieved in the clothing product categories with continued softer performance in footwear.

Outlook
Pepkor's defensive market position and strategy of providing customers with value at affordable prices continues to resonate with customers, as demonstrated through continued market share growth. This will continue to support performance in challenging operating conditions where sales volatility is expected to continue as customers have to contend with high levels of unemployment and increased cost of living in what remains to be an extremely challenging retail environment.

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.