Pep & Co losses soar after pricey push to take on Primark
Losses at Pep & Co, the bargain fashion chain backed by South Africa’s retail billionaire Christo Wiese, soared last year on the back of its rampant expansion plan.
The company, which opened 50 shops last year, was launched by South Africa’s Steinhoff in a move to target cash-strapped families in towns not yet colonised by rival Primark. The company has continued its store opening programme and now has 95 shops as of last week.
Pep & Co’s holding company, Pepkor UK, recorded sales of £29m in its first year of having shops open but pre-tax losses grew from £4.3m to £18.9m in the year to 24 September 2016. A spokesman clarified that the £4.3m of losses was before its shops had opened in 2015.
Steinhoff last year also bought Poundland in a £610m takeover and has since unveiled plans to introduce 100 Pep & Co fashion concessions within the single-priced retailer’s larger shops.
Around 95pc of Pep & Co clothes cost £10 or less, although Adrian Mountford, managing director, said earlier this year that the retail chain might have to re-think its £1 t-shirts as the weaker pound meant the chain was losing money on those products.
The sterling slump since the EU referendum has prompted a steep jump in import costs for fashion retailers which source the majority of clothes from Asia in dollars. Pep & Co has said it hopes to minimise the return of inflation by securing better deals with suppliers as sales volumes increase.
Last month Steinhoff appointed administrators to 60 unprofitable 99p Stores shops that had shut following an ill-fated takeover by Poundland a year earlier.
Mr Wiese’s investment vehicle has already pumped £20m into the UK Pep & Co venture.