EEMEA Consumer: Re-tales from London

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EEMEA Consumer: Re-tales from London

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EEMEA Consumer

Re-tales from London

Industry Overview

Discretionary: attractive valuation meets trough EPS 30 June 2026

Engagement on SA apparel stocks was buoyed by low valuation levels & trough earnings. Equity

But disappointments from the past year are still fresh in mind and investors are carefully EEMEA

weighing this against structural concerns - online gaming & Shein/Temu. Foschini (Buy) Consumer

was topical, as the low FY26 earnings base was partly led by inventory write-downs and Michael Jacks, CFA >>

credit losses. Several investors seemed willing to move past Mr Price’s (Neutral) Research Analyst

acquisition of NKD on the premise that sourcing tailwinds in CEE value retailers could Merrill+27 113Lynch055 (South158 Africa)

translate to near-term earnings beats. Opinion about Pepkor (Buy) was mixed. Key michael.jacks@bofa.com

concerns include management’s persistence in pursuing another offshore acquisition and Jameel Bakhsh, CFA >>

Research Analyst

the recent spike in bad debts. Absent these, we think sentiment would decisively shift. Merrill Lynch (DIFC)

We experienced limited pushback on our cautious Truworths (Underperform) view. jameel.bakhsh@bofa.com

Pepco the ‘cleanest’ equity story in our coverage

In CEE, Pepco (Buy) is widely acknowledged as the cleanest apparel equity story. Recent

pattern of ‘beat and raise’ provides further confidence, and ongoing improvements in

operating metrics (LfL growth, margin expansion, FCF generation) are anticipated – we

remain 17% ahead of consensus on EPS for FY26-27E. The upcoming Q3’26 update on

July 9th is expected to be positive and execution of the announced EUR400m tender

offer supportive of the share. No pushback on our cautious view on LPP (Underperform)