South African Apparel Retail: Value unlock scenario analysis - Consolidation could be the preferred route

Research evidence excerpt

South African Apparel Retail: Value unlock scenario analysis - Consolidation could be the preferred route

J P M O R G A N CEEMEA Equity Research

30 July 2026

South African Apparel Retail

Value unlock scenario analysis - Consolidation could be

the preferred route

We continue to highlight two structural headwinds that, in our view, are South African Consumer

ACconstraining both growth and profitability: (1) wallet displacement from online Shaun Chauke

gambling (R75bn) and (2) the impact of Chinese e-commerce players on price (27-11) 507-0735

perception and sector margins (R8.2bn) (see our note). In this context, we view shaun.chauke@jpmorgan.com

consolidation as the most credible route to restoring industry economics and J.P. Morgan Equities South Africa (Pty) Ltd.

improving the sector’s ability to defend share of wallet. Accordingly, within our Elena Jouronova, CFA

Apparel Retail coverage universe, we assess two combinations that we believe are (971) 4561-2010

elena.jouronova@jpmorgan.com

strategically coherent. First, Pepkor (OW) + TFG (N) is best framed as a market- J.P. Morgan Securities plc

completion and capability-acquisition thesis, pairing Pepkor’s value leadership

with TFG’s mid-to-upper brand portfolio and scaled e-commerce engine (Bash),

with additional optionality through home and potential portfolio reshaping. On our

illustrative cash-deal assumptions (30% premium to the 90-day VWAP), we

estimate ~17% earnings dilution in year 1 (excluding synergies), a pre-tax break-

even synergy requirement of ~R1.8bn, and a pathway to earnings accretion by year

3. Second, Mr Price (N) + Truworths (N) is a scale, breadth and execution-

leverage thesis that combines Mr Price’s high-volume value execution across