JOHANNESBURG, South Africa – South African retailer Pepkor Holdings said on Monday it will exit Zimbabwe after an economic crisis in the country hurt its performance.
Severe shortages of foreign currency, fuel and electricity have sent inflation soaring to its highest since 2008, and dashed hopes the economy might recover under President Emmerson Mnangagwa, who took over from Robert Mugabe in 2017.
“The decision to exit Zimbabwe was based on the continued adverse macroeconomic conditions affecting trading and the weakening currency,” Pepkor’s statement said.
Pepkor operates retail shops under the PEP brand in South Africa. In Zimbabwe, the company was operating as Power Sales, after buying one of Zimbabwe’s most recognisable retail brands.
Its Zimbabwe business made a loss of R70 million (US$4.8 million), including the full impairment of the disposal of the group’s assets, it added.
Overall, Pepkor, 71 percent owned by scandal-hit retailer Steinhoff International, said its profits grew by 14.5 percent in the year to September 30.
Headline earnings per share, the main profit measure in South Africa that strips out certain one-off items, stood at 96.8 cents, verses 84.5 cents a year earlier. Revenues from continuing operations grew by 9 percent to R69.6 billion.
Pepkor flagged earlier in November that it would need to take a 1.2 billion rand charge related to its building materials unit that has struggled in a tough market.
Leon Lorens, Pepkor’s CEO, said the company was satisfied with its performance given the difficult retail environment in South Africa.
Consumer finances have been constrained amid stagnant growth, rising living costs and unemployment that stands at nearly 30 percent.
“We see many opportunities for market share expansion,” Lorens said, adding the company was also focused on cutting costs. – Reuters
