Former Poundland owner Pepco Group has reported a solid start to FY26, with like-for-like growth at its core Pepco fascia helping to offset disruption at Dealz, while full-year guidance remains unchanged.

In a trading update for the first quarter to 31 December 2025, the pan-European discount retailer said group revenues rose 4.3% year on year on a constant currency basis to €1.4bn (£1.21). Like-for-like revenues excluding FMCG increased by 3.3% across the group.

The performance was driven by Pepco, which delivered like-for-like revenue growth of 4.2% excluding FMCG, with particularly strong trading in December despite what the group described as a “highly competitive and promotional seasonal period”. Pepco saw positive LFL growth in key markets including Poland, Iberia and Italy, supported by strong volume growth.

By contrast, Dealz recorded a 7.7% decline in like-for-like revenues during the quarter. Pepco Group said the business experienced operational disruption in October and November as it replatformed following the sale of Poundland, although like-for-like performance recovered materially in December. The group said it continues to progress with a divestment of Dealz, with an intended completion in 2026.

Group gross margin improved significantly, rising 360 basis points year on year to 49.4%, in line with the final quarter of FY25, despite ongoing price investment at Pepco.

Store expansion continued to focus entirely on the Pepco brand. The group opened 51 net new stores during the quarter, taking the total estate to 4,410 stores.

All new openings were Pepco stores, with 37 added across Central and Eastern Europe and 14 in Western Europe. Dealz operated 344 stores at the quarter end, with no new openings. Pepco Group expects to open around 250 net new stores across FY26, all under the Pepco banner.

Chief executive Stephan Borchert said Pepco delivered a “resilient performance” in the quarter, highlighting strong December trading and consistent double-digit like-for-like growth in Western Europe excluding FMCG.

“Consumer confidence in some markets remains subdued against an ongoing uncertain macroeconomic backdrop, but our focus on delivering exceptional value is resonating with customers who continue to prioritise value in their everyday shopping decisions,” he said.

The retailer said its FY26 outlook, which includes expected revenue growth of 6% to 8%. This guidance reflects the planned exit from FMCG, which is expected to reduce full-year revenue growth by around two percentage points, with the impact weighted towards the first half.

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