Pepkor Holdings Limited, a JSE-listed investment holding company, has announced robust interim financial results for the six months ended 31 March 2025. The company highlighted strong performance across its retail operations, significant growth in its FinTech segment, and disciplined cost management as key drivers of its success.

For the period, Pepkor reported a 12.8% increase in group revenue to R48.8 billion. Operating profit (before capital items) grew by 13.3% to R5.8 billion. The gross profit margin saw an expansion of 110 basis points to 39.2%. Normalised headline earnings per share (HEPS) surged by 18.9% to 84.3 cents, while statutory HEPS increased by 12.4% to the same figure. The group maintained strong cash conversion at 82% on a rolling 12-month basis and a robust return on net assets of 23.7%.

Pieter Erasmus, CEO of Pepkor Holdings Limited, stated, “We have delivered consistent retail performance, strategically executed on our FinTech growth ambitions, and maintained disciplined cost management. Our focus on digital and financial inclusion yields tangible benefits for our customers and the group’s performance. We are particularly pleased with the progress in our FinTech segment and our expanding cellular market share, which are becoming increasingly significant contributors to our overall success.”

Pepkor's traditional retail businesses demonstrated strong trading momentum, outperforming the market and expanding market share. Group merchandise sales increased by 10%, with like-for-like sales up by 7.8%. In Southern Africa (excluding PEP Africa and Avenida), like-for-like sales grew by an impressive 9.6%. This performance was attributed to improved product availability, healthy growth in retail credit interoperability, and solid growth in cellular connectivity.

Key brand performances within retail operations were noteworthy. PEP, the group’s largest brand, delivered a stellar performance with like-for-like sales growth of 10% and above for six consecutive months, expanding market share across key product categories. 43 new stores were opened, bringing the total to 2,649 stores. Ackermans continued its recovery, posting like-for-like sales growth of close to 10% and gaining market share in key categories; its store base expanded to 1,018 stores. The Speciality division, encompassing brands like Tekkie Town, Dunns, Refinery, and CODE, showed solid performance. The newly launched Ayana brand, focused on adult womenswear, was successfully introduced across 32 stores, contributing to the division's store base expansion to 972 stores. The Lifestyle division (Rochester, Bradlows, Sleepmasters, Incredible Connection) delivered consistent performance with 6.3% like-for-like sales growth, outperforming the market in key product categories. Lastly, Avenida, Pepkor’s Brazil-based operation, saw an improvement in like-for-like sales performance in the second quarter despite a challenging environment.

The FinTech segment was a significant growth driver, delivering healthy growth underpinned by strategic execution and extensive reach. Fintech revenue increased by 34.5% to R7.9 billion, with revenue from financial services alone growing by 67.3% to R3.4 billion. Key areas within FinTech include Connectivity & Cellular Market, where Pepkor solidified its dominance by selling 6.8 million cellular handsets during the period (a 17% increase) and now sells eight out of every ten prepaid handsets in South Africa, according to GfK. Smartphone penetration increased, constituting 65% of handsets sold, and the active SIM card base reached 30 million.

A standout performer in the FinTech segment is FoneYam, the innovative smartphone rental product. It continued its strong growth, enabling more than 1.5 million customers to acquire smartphones by solving affordability barriers. Monthly activations averaged 165,000, and FoneYam made a meaningful contribution to group profitability. The service allows customers to rent a smartphone with a small initial payment (around 30% of retail price) and pay the rest in 12 monthly instalments. CEO Pieter Erasmus commented, “By making smartphones affordable, we connect more South Africans to the digital economy and enable access to education and essential services.”

Other FinTech achievements include an expanded Retail Credit A+ base to 3.1 million customer accounts (564,000 new). The Insurance (Abacus) arm saw 3.3 million PAXI parcels covered, and embedded insurance was successfully launched in FoneYam in November 2024, covering 840,000 devices. The Flash business, serving the informal market, increased its throughput by 23.6% to R28.8 billion, with its trader network expanding to 175,000.

Pepkor's digital engagement also advanced. Group online sales increased by 18%, and by 30% in the clothing and general merchandise segment, driven by strong growth in Ackermans and Speciality. The +more customer value platform, launched in March 2024, is still in its early stages but already includes nearly 10 million members, with engagement indicators improving monthly.

Strategically, Pepkor made significant strides towards future expansion. Key developments include the acquisition of Choice Clothing, opening a new customer segment. The group is also integrating Shoprite’s furniture business into its Lifestyle division to increase scale and synergies. Furthermore, focused efforts in adult wear, through the Ayana brand launch and the planned Retailability acquisition, aim to substantially increase Pepkor's presence in this category. Erasmus noted, "These developments are transformative for Pepkor."

Despite a challenging macroeconomic environment in South Africa, Pepkor remains optimistic about its future. The group anticipates that factors such as downward-trending inflation, reduced load shedding, and the introduction of the two-pot retirement system will provide some relief for consumers. "Despite the subdued and competitive market, we continued to deliver excellent growth and we’re confident that our consistent performance and growth in FinTech will continue to underpin strong performance,” concluded Erasmus.