South Africa's Pepkor Q1 sales rise as cash-strapped shoppers seek value

JOHANNESBURG (Reuters) - South African retailer Pepkor Holdings said on Tuesday that sales in its first quarter rose by 7.7% as it continued to acquire market share as cash-strapped shoppers battling job losses turned to its budget outlets.

Group revenue at the clothing and homeware retailer grew to 20.3 billion rand ($1.33 billion) in the three-month period ended Dec. 31 from 18.9 billion rand a year earlier.

South African clothing retailers have been hit as a second wave of the COVID-19 pandemic and job losses constrain discretionary spending.

However, Pepkor, majority-owned by Steinhoff, is faring better than others with its focus on budget-conscious consumers, including more than 17 million South Africans on welfare and special COVID-19 grants.

The retailer, which vies with TFG's Jet clothing chain, said revenues at its clothing and general merchandise division rose by 8%, with the Pep and Ackermans clothing brands reporting sales growth of 8.9%, or 6.3% on a like-for-like basis.

The furniture, appliances and electronics division, which includes the JD Group, Incredible Connection and Hi-Fi Corporation brands, reported revenue growth of 7.5%, driven by technology upgrades and work and school from home trends, while revenues at its fintech division rose 5.8%.

Net debt at Dec. 31, including discontinued operations, fell to 5.6 billion rand from the 7.1 billion rand reported on Sept.30.

Pepkor said the delayed start to the school year is expected to shift some January sales into February, while volatile trading patterns are expected during the second quarter due to COVID-19 restrictions.

($1 = 15.3038 rand)

(Reporting by Nqobile Dludla; Editing by Promit Mukherjee, Kirsten Donovan)