Pepco Group's value strength continues to resonate in H1

By

Nigel TAYLOR

Published
Jun 6, 2023

Consumers searching for value in these tough economic times continue to be core to European value retail giant Pepco’s impressive performance. 

The owner of the Poundland brand in the UK, the Dealz and Pepco chains, plus the maker/retailer of the Pep&Co fashion line again delivered strong trading momentum across all its formats in the first half to 31 March, it said Tuesday.

Total revenues leapt 22.8% to €2.8 billion while like-for-like sales impressed with a 11.1% hike in the period. Pepco brand comparative sales rose 15.8% and the rise was 4.9% at Poundland Group.

H1’s financial performance remained ahead of last year on a constant currency basis as underlying EBITDA rose a solid 11% to €377 million. Crucially, it remains confident on the EBITDA outlook for the full year and there was no change to its previous guidance.

That said, the gross margin came in at 40.1% in H1, representing “an anticipated trough in margin performance”, but it expects a recovery in H2 “as cost input inflation eases”.

And of course, Pepco continues to grow at a rapid pace. The total number of stores at end of H1 hit 4,127, up 12% year-on-year, driven by growth of Pepco in Western Europe. Meanwhile, the business is on track to open at least 550 net new stores during the current financial year.

CEO Trevor Masters said:  “The group continued to make strong progress against our strategic objectives over the half year. 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.

“As we highlighted previously, inflation remains at elevated levels in Central Europe, against which trading in Pepco stores has remained challenging during the third quarter to date. Despite this, we have continued to do the right thing for customers on a budget by maintaining our price leadership and growing our market share, while focusing on the cost of doing business in these inflationary times.”