Pepco Group says trading environment remains challenging
Pepco Group, the owner of Poundland, Pepco and Dealz, has said its trading environment remains challenging as it announced its first-half results.
In the six months to 31 March, revenue increased by 11% at constant currency to €3.2 billion following the opening of 289 new stores.
On a like-for-like basis, sales fell by 0.7%, 3.2%, and 4.6% respectively at Poundland, Pepco and Dealz, and by 2.5% overall. At Poundland, a positive FMCG performance was offset by weaker trading in the clothing and general merchandise categories as they transitioned to new Pepco ranges.
The group delivered 289 net new store openings during the period, which included 203 in the first quarter and 86 in the second. At Poundland, there were 81 gross new store openings which included 56 Wilko conversions.
In February, the group announced that it would cease operations in Austria due to it not expecting the market to deliver the appropriate level of returns.
Commenting on the first half performance, Andy Bond, executive chair of Pepco Group, said: “We continued to make good progress against our renewed strategy in H1, growing revenue by 11% to €3.2 billion and driving a positive trajectory in gross margin.
“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. We expect a continued upward trajectory in LFL sales at Pepco in H2.”
Looking ahead, the group said its trading environment across Europe remains challenging, although it has been encouraged by signs of an improved like-for-like sales performance in some of its core central eastern European markets during the second quarter.
While Poundland has been impacted by a substantial switch in its clothing and general merchandise categories to Pepco ranges, the group said the retailer should start to see an improved performance over the coming months.
Bond added: “The group is confident about delivering profitable growth this financial year – reflecting a stronger and more resilient business – as we continue to move forward to build Europe’s leading variety discount retailer.”
Pepco has also announced that it has appointed Stephan Borchert as its new chief executive.
