Pepkor warns of likely stock shortages due to the coronavirus

Pepkor is the parent company of low cost consumer goods stores Pep and Ackermans.
Pepkor is the parent company of low cost consumer goods stores Pep and Ackermans.
Nadine Hutton

Pepkor - which owns Pep, Ackermans, Incredible Connection, Russells and Shoe City - says that coronavirus will in all likelihood create temporary shortages in certain stock items.

Woolworths and Shoprite have also warned that manufacturing disruptions in China will impact their stores. Shoprite has warned that sales worth R100 million may be affected as it is struggling to import winter stock, particularly heaters and electrical blankets.

The coronavirus has wreaked havoc on Chinese manufacturing since the end of January, and factories are still not back at full capacity.  Millions of workers are staying home to avoid being infected.

On Wednesday, the Chinese government allowed the 11 million inhabitants of Wuhan, where the first case of the coronavirus epidemic was reported, to return to work after the city was on lockdown for six weeks. The coronavirus has now infected almost 81,000 people in China, with the death toll reaching 3 158.

Imports from China to South Africa have been hit by travel and freight disruptions across the world.

At Pepkor’s annual general meeting on Wednesday, CEO Leon Lourens said that most of the group’s retail brands source products from China.

While the impact of the coronavirus has not been significant on group sales year-to-date, it will “undoubtedly” have an impact on the second half of the current financial year due to the lag effect in the supply chain, he added. How big the impact will be, will become clear once most factories resume normalised production levels.

Lourens says that Pepkor has long supply chain lead times, which allows its buying teams to “tactically” respond to curb any negative impact.

Pepkor saw double-digit growth in sales at Pep and Ackermans in January as part of “back to school” spending. “This was followed by weaker trading in February and brings year-to-date performance largely in line with that what was reported during the first quarter.”

Trading in both JD Group and The Building Company was weaker during January and February, Lourens said. "High unit prices and the challenges in the construction industry continue to impact on the businesses in these divisions."

Pepkor has 5 400 stores that operate across 11 African countries.

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