South African retailer Pepkor expects FY profits to fall, shares dive

• by Reuters
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JOHANNESBURG (Reuters) – Retailer Pepkor Holdings Ltd, previously known as Steinhoff Africa Retail (STAR), said on Tuesday its full-year earnings are expected to fall as much as 42 percent mainly due to a provision, sending its shares more than 11 percent lower.

The clothing and furniture retailer said in May its earnings would be affected after it made a provision of 500 million rand ($36 million) to cover a third-party debt acquired through using its Steinhoff International’s shares as collateral.

An accounting scandal at Steinhoff that came to light in December last year wiped more than 90 percent off the company’s market value and forced it to sell assets.

Pepkor said headline earnings per share for the year ended Sept. 30 are expected to be between 77.8 cents per share and 91.2 cents per share compared with 133.6 cents per share in the same period a year ago.

Shares in Pepkor were down 5.87 percent to 17.33 rand after initially falling more than 11 percent.

“If you look at what has come out it’s not exactly stellar numbers. These things tend to get hammered on the basis of expectations,” Ryan Woods, market trader at Independent Securities, said. ($1 = 14.0748 rand)

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