Poundland owner Pepco Group warned the trading environment “remains challenging” as it reported a dip in like-for-likes following a tough comparative period last year.
The discount giant posted an 11% jump in group sales to £2.73bn (€3.2bn) on a constant currency basis for the six months to 31 March. However, on a like-for-like basis, sales fell 2.5%.
Comparative sales at Poundland also slipped 0.7%, as a positive FMCG performance was wiped out by a weaker showing in clothing and general merchandise following a transition to new Pepco ranges.
Pepco said the overhaul had mostly been completed and that it expects to see “progressive improvement” in performance over the coming months.
Subscribe to Retail Gazette for free
Sign up here to get the latest news straight into your inbox each morning
The discount chain opened 81 gross new stores during the period, which it said largely reflected 56 Wilko conversions.
Pepco, which opened 289 net new stores across its Poundland, Dealz and Pepco fascias, said it expected to open at least 400 shops in the current financial year.
Pepco Group executive chair Andy Bond said: “While the trading environment remains challenging, we are encouraged by signs of an improved performance in some of our core Pepco Central and Eastern Europe markets – a key geographical region for the group – during the second quarter.”
Bond said he expects to see a “continued upward trajectory” of like-for-likes in the remainder of the financial year.
“We remain focused on cost control and are on track to deliver a significant reduction in our capex this year – making us increasingly confident on enhanced free cash flow generation in [this year],” he said.
The trading update was coupled with the appointment of former Sephora president Stephan Borchert as chief executive.
Borchert, who previously worked at Vision Express-owner GrandVision, will take up the role on July 1 to “acquaint himself with the Group’s operations and culture”.
The appointment will see Bond remain in his role as Executive Chair during the three-month transition period before reverting to the role of non-executive chair on October 1.
Click here to sign up to Retail Gazette‘s free daily email newsletter
