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Retail

Discount Retailer Pepco Sees Sales Growth Slow

By Reuters
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Discount Retailer Pepco Sees Sales Growth Slow

European discount retailer Pepco Group reported a slowdown in underlying sales growth in its latest quarter, saying it faced a challenging trading environment in April and May, particularly in Central Europe.

The Warsaw-listed group, which owns the Pepco, Poundland and Dealz brands, did, however, maintain its financial guidance for the full 2022-23 year.

It said like-for-like sales rose 2.6% in its third quarter to June 30, after rising 8.5% in the second quarter.

Trading Recovery

Like-for-like sales in its Pepco branded business fell 1.2% in the third quarter overall, but trading had recovered in recent weeks with a positive like-for-like performance in June and the start of the fourth quarter.

Third quarter like-for-like sales in the Poundland Group - Poundland and Dealz - rose 9.0% due a strengthening performance in fast moving consumer goods.

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Group Revenue

Total group revenue increased 12.5% on a constant currency basis, to €1.37 billion, boosted by 159 new store openings.

The group said it expected to report full year core earnings (EBITDA) growth in the 'mid-teens' on a constant currency basis, assuming no further significant deterioration in the trading environment.

'Continued Challenges'

“As we highlighted at our interim results in June, the macro-economic climate continues to be challenging, particularly in Central Europe, due to elevated levels of inflation," commented Trevor Masters, Pepco CEO. "In addition, Pepco’s Q3 growth reflected a period where the business benefited from trading upside in the prior year driven by the influx of people from the Ukraine war into its core markets.

"Poundland Group delivered a strong trading performance in Q3, driven by consumers prioritising spend on FMCG items. Both Pepco and Poundland Group are in positive LFL growth at the start of Q4."

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