Pepkor slumps on earnings decline. The retailer says one-off costs related to a third-party debt provision and

share dilution will leave full-year HEPS as much as 42% lower.

Pepkor fell over 11% at its worst yesterday after the retailer warned of a

sharp fall in full-year earnings and said it wouldn't exercise call options

giving it a stake in Shoprite.

In a trading statement, the company - formerly called Steinhoff Africa Retail

- said earnings and headline earnings per share (HEPS) for the year to end-

September would be between 32% and 42% down on last year. Its results were

affected by a 500 rand million provision made to cover a corporate guarantee and

associated loans. The one-off costs related to this would strip 14c per share

from its HEPS, while shares issued to buy Tekkie Town last year and for last

September's listing would reduce HEPS by a further 30c due to dilution.

The group said following discussions with the Public Investment Corporation

and Lancaster, and based on senior council advice, they had decided to

terminate call option agreements to acquire stakes in Shoprite. Call options

belonging to Christo Weise's Titan Group and Lavender Sky terminated earlier.

Had the transaction proceeded, it would have resulted in the combined parties

taking voting control of Shoprite with a 23.1% economic interest and 50.6%

voting control.

Pepkor's shares closed 6.4% down at 17.23 rand. Majority shareholder Steinhoff

International fell 7.6% to 1.83 rand.