Pepkor sold 5.6 million mobile phones through its retail stores, which include the PEP and Ackermans chains, in just six months.

PEP was responsible for four million of those sales, 50% of which were smartphones, the JSE retailer disclosed on Tuesday. Ackermans meanwhile, contributed a further 1.3 million cellphones to group sales between October 2023 and March 2024.

Indeed, Pepkor is by far the largest retailer of cellphones in South Africa.

“The group sells seven out of 10 prepaid smartphones in South Africa, according to GfK data, and 5.6 million cellular handsets were sold during the period, 58% of which were smartphones,” Pepkor told investors in its results report.

Private-label cellular handsets such as Stylo and Premio contributed 18% to the product mix, and achieved higher gross profit margins for Pepkor than branded models.

FoneYam, a newly developed cellphone rental product designed to make smartphones more affordable to consumers, is now available through a thousand of the group’s stores, with 202 000 handsets sold on rental in the six-month reporting period to March.

“The FoneYam cellular rental book amounts to R258-million (gross) with an initial provision level of 16%,” Pepkor said in notes alongside its interim results.

This led to “substantial customer acquisition expenses”, contributing to an 18.9% increase in operating expenses.

Operating profit

Ongoing revenue earned from mobile network operators increased by 8.8% year on year to R1-billion, Pepkor said.

The group reported operating profit growth of 4%, reaching R5.1-billion in the six-month period on the back of revenue that climbed 9.5% to R43.3-billion, buoyed by back-to-school sales and strong Easter trade.

The retailer also said supply-chain disruptions at local ports, due to underinvestment by state-owned logistics company Transnet in infrastructure, adversely impacted in-store product availability.

Early in the year, Pepkor had over R1-billion worth of products sitting at the ports but “that’s less than half that now”, CEO Pieter Erasmus said in an interview.

“The ports are still about a month behind in terms of working through stuff… [We need] to make sure we don’t bring in winter stock too late because then we have to mark it down,” he said.

The retailer’s suppliers are redirecting shipments to ports that are not full and Pepkor also plans to bring in products a month earlier than normal. – © 2024 NewsCentral Media, with additional reporting by Nqobile Dludla, © 2024 Reuters