Pepkor Europe and Poundland stay strong, Pep&Co fashion ops add edge

By

Sandra Halliday

Published
Aug 29, 2019

Discount retailer Pepkor Europe has reported a strong performance in the first nine months of its financial year (the period up to the end of June) with the company saying on Thursday that its three trading brands, Pepco, Dealz and Poundland were all buoyant.

Overall revenue rose 13% to €2.567 billion, driven mainly by the continued expansion of Pepco in Central and East Europe and the parent company traded from more than 2,500 stores, at the end of the period, a 12% year-on-year rise.)

That expansion helped the Pepco operation to a 27% revenue increase, hitting €1.209 billion. 

Meanwhile, the Poundland/Dealz operation, which includes the former chain in the UK and the latter in Ireland and mainland Europe, reported growth that was more muted, but a 3% revenue increase to €1.358 billion isn't anything to be sneered at in current market conditions.

Pepkor said Poundland “continued to outperform the wider UK high street, with its competitive differentiation being driven by the introduction of Pep&Co branded clothing shop-in-shops, now present in around 300 stores, and measured product range extension to support a broader range of price points.”

Poundland also continued to rationalise its store portfolio, “balancing the exit from stores in weaker catchments with carefully selected new store opportunities in stronger locations.”

It opened 24 new stores in the UK and the Republic of Ireland and relocated a further eight to larger sites, favourable locations, or sites with advantageous contracts terms. These stores continued to deliver strong returns on invested capital. 

Analysts seemed to be impressed and GlobalData’s Amy Higginbotham said: ‘‘Despite its position as a mature retailer in the UK market, Poundland continues to report commendable growth as low consumer confidence and shoppers’ appetite to trade down continues to play to its advantage.”

She said acceleration in Q3 “puts Poundland in a healthier position than less cautious competitors such as Poundstretcher. However, Poundland’s store estate is still large – it had [UK] 842 stores at the end of June – and it must ensure that none of these are neglected.”

She also hailed its continued investment in expanding its product range in categories such as health & beauty and homewares that "continues to differentiate it from competitors."