// Pepco Group reports an 11% rise in first-half core earnings as revenue surge 23%
// The discount group said its results were bolstered by new store openings
Poundland owner Pepco has posted an 11% increase in sales and 23% boost in revenue but warned that trading has been tougher in its third quarter.
The Warsaw-listed group, which owns Pepco, Poundland and Dealz, said an uncertain trading backdrop had continued through April into May, with weaker consumer sentiment around discretionary spend in response to high inflation, particularly in Central Europe.
Sales grew 11.1% across the group, with Pepco sales rising 15.8% and Poundland revenues rising 4.9% on a like-for-like basis in the six months to March 31.
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The group praised its progress in its growth strategy for the results, which saw the retailer’s total number of stores reach 4,127 at the end of the trading period – up 12% year on year.
It is on track to open at least 550 net new stores during the current financial year and is confident on the EBITDA outlook for the full year.
Last month, Poundland said it was continuing to seek out locations in the M25 for its new store format, following successful openings of the value retailer‘s local stores during the last six months in East Dulwich, Clapham, Swiss Cottage and Whitechapel.
Pepco Group chief executive Trevor Masters said: “The Group continued to make strong progress against our strategic objectives over the half year, while delivering an increase in revenues and underlying EBITDA. We opened 166 net new stores in the period and are confident on meeting our target of at least 550 net new stores this financial year, as part of our targeted and profitable opening programme.
“Our growth strategy in Western Europe is progressing well, reflecting the strong appeal of the Pepco brand to customers across the whole continent. Italy, where we recently opened our 100th store, and Spain – which is benefiting from our combined clothing, general merchandise and FMCG offer – continue to be our largest and fastest-growing Western European territories. In May, we were delighted to launch the Pepco brand in Portugal.”
Masters highlighted the challenge of inflation in Central Europe, against which “trading in Pepco stores has remained challenging during the third quarter to date”. Despite this, he believes the firm remains well positioned, predicting to see gross margins trending upwards in the second half, as the group benefits from the tailwinds on certain input costs, including commodity and freight.
“We are focused on executing our strategy and remain on track to deliver full year EBITDA growth in line with previous guidance. I would like to recognise our colleagues and suppliers across the business and thank them for their hard work and commitment to serving our customers,” Masters concluded.
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