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.
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."
