By Nqobile Dludla
JOHANNESBURG (Reuters) -Disruption at South Africa’s ports has left discount retailer Pepkor Holdings struggling to import goods, with an estimated 700 million rand ($37.85 million) worth of stock stuck at sea, its CEO said on Wednesday.
Although local retailers have been moving production closer to home, they still rely on overseas markets for some products such as fabrics.
South African state-owned logistics company Transnet has said backlogs at the Port of Durban and congestion at Richards Bay were due to factors including adverse weather conditions and underinvestment in equipment and maintenance.
Pepkor CEO Pieter Erasmus told Reuters that he was not too concerned about the group’s back-to-school stock as it is mostly produced locally and the raw materials landed months ago. However, some items like shoes might not arrive as quickly.
Pepkor commands a higher share of the back-to-school market than its rivals.
“We’ve got significant value items stuck on the sea at the moment, between 1 and 2 weeks late. We don’t think the impact will be that big on our Christmas trade, bearing in mind we’re a more basics business, with a higher component of replenishment,” he said.
The owner of the budget PEP and Ackermans clothing brands carries more items that tend to be replenished regularly making the business less seasonal compared to others, which could shield it better than rivals who depend on fast fashion, Erasmus added.
“We will have to adjust our planning process going forward, we don’t know how long this will take to sort out. The feedback we’re getting is 8-12 weeks but there is no certainty,” he told investors.
Pepkor echoed the frustrations shared last week by its more fashionable rival Mr Price, which said the backlog was becoming an “increasing risk to business” but was satisfied that it has adequate stock levels for the upcoming holiday season.
($1 = 18.4942 rand)
(Reporting by Nqobile Dludla; Editing by Jacqueline Wong; Editing by Kirsten Donovan)
