Pepkor expects higher earnings, but warns building materials took a knock

Retailer Pepkor, a subsidiary of Steinhoff [JSE:SNH], expects to report increased earnings for the 2019 financial year.

The group – which owns clothing retailers Pep and Ackermans, furniture stores such as Bradlows, Russells and Incredible Connection –  on Thursday issued a trading statement, indicating that it expects headline earnings per share to be between 91c and 99.4c. This is between 7.7% and 17.7% higher than the 84.5c reported for the same period last year.

Earnings per share is expected to be between 57.6c and 65.1c, this is between 22.1% and 32.1c lower than the 83.6c reported last year.

"In a difficult trading environment the group's major business segments have performed well, with Pepkor's defensive discount and value market positioning, disciplined focus on customer needs and low cost of doing business proving to be resilient," the statement read.

However Pepkor warned that the performance of its building materials unit – which included Buco and Timbercity – was negatively impacted by the contraction in the building materials market. This business represented 13% of Pepkor's revenue and 3% of operating profit before capital items in the 2018 financial year. 

Pepkor will release its financial results for the financial year ended September 30, 2019 on Monday November 25.

The share closed 0.29% higher than the previous close at R17.55c.

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