Poundland drives sales & profits for European owner

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Poundland profits
// Pepkor Europe, which operates Poundland, posts 13.3% rise in half-year sales
// Operating profit surges 29.1%
// Results boosted by an 11.9% increase in new store openings
// Comes as Pepkor Europe’s parent company Steinhoff revealed improvements in half year losses as it recovers from a 2017 accounting scandal

Pepkor Europe has reported a double-digit surge in half-year sales and profits, boosted by the performance of its flagship discount chain Poundland.

According to its interim report for the half-year period ending March 31, Pepkor reported a 13.3 per cent year-on-year uptick in overall revenues to €1.72 billion (£1.53 billion).

Meanwhile, Pepkor’s EBITDA surged by 29.1 per cent to €151 million (£134 million).

The retail firm, which operates Poundland in the UK and Dealz and Pepco in mainland Europe, now trades from 2473 stores across the continent – an 11.9 per cent year-on-year increase.

On its own, Poundland reported revenue growth of 1.6 per cent year-on-year to €920 million (£829 million) during the half year period, while its store estate grew a marginal 0.5 per cent to 875.

Pepkor said Poundland delivered “positive total sales growth” and continued to outperform the wider UK high street.

It highlighted that this was boosted by the rollout of Pep&Co clothing shop-in-shops, now present in approximately 300 Poundland stores.

The company added that Poundland continued to manage its store portfolio by “balancing the exit from stores in weaker catchments with carefully selected new store opportunities in stronger locations”.

Twenty new Poundland stores opened in the first half while another five were relocated to larger sites.

“These results are further evidence that Pepkor Europe is developing into a strong, geographically well-balanced pan-European variety discount retailer,” Pepkor Europe chief executive Andy Bond said.

“The foundation of the group’s continuing strong performance remains our ability to provide exceptional value to our millions of customers every week within a core discount segment which is being accessed by an increasing number of consumers across Europe.”

He added: “Our trading progress has been matched by our strategic development. We continue to confidently expand Pepco and our belief that the Dealz format in mainland Europe can provide an exciting additional source of growth is increasing.

“Quality, scaleable infrastructure across the group is necessary to secure the growth opportunity available to us, and while such investment may slow our rate of earnings growth in the second half year, with a focused strategy in place a strong financial base and three trading brands all performing well, the opportunity for long-term growth across Europe is clear.”

Pepkor’s half-year results some shortly after is South African parent company, Steinhoff, revealed its own half-year report as it continues to recover from a major accounting scandal from 2017.

The retail conglomerate reported a €356 million (£315 million) half-year loss from continuing operations, although net sales from continuing operations increased three per cent year-on-year to €6.8 billion (£6 billion).

The loss it recorded for that period was also an improvement on losses of €392 million during the same time last year.

Steinhoff said its Pepkor Europe arm was one of the driving forces behind the sales rise.

On an overall basis – factoring in both continuing operations and discounting operations – Steinhoff recorded a loss of €571 million (£505 million).

This was also an improvement when compared with last year’s loss of €609 million.

The news prompted shares in the South African retail giant to surge more than 14 per cent, as the company reduced its losses for the six months to the end of March.

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