European Discounter Pepco To Slow Store Opening Plan

By Reuters
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European Discounter Pepco To Slow Store Opening Plan

Pepco Group, the European discount retailer that issued two profit warnings last month, will slow down its aggressive store opening programme, it said.

The Warsaw-listed group, which owns the Pepco and Dealz brands in Europe and Poundland in Britain, said it would open at least 400 net new stores in its 2023/2024 year, down from 668 in 2022/23.

The group, which is hosting a capital markets day in Poland, said it will also review the store refit programme of its core business in Central and Eastern Europe.

Both moves are part of a plan to rebuild profitability by adopting a more disciplined approach to growth and investment capital expenditure across the group.

"We need to refocus on delivering more measured growth – doing less, to achieve more – with a greater focus on improving profitability and cash generation in our established business," executive chairman Andy Bond said.


Fourth-Quarter Results

Last week, Pepco Group reported a 12.5% jump in its fourth-quarter revenue, to €1.44 billion, on a constant currency basis, as the European discount retailer opened more than expected new stores during the year.

The Warsaw-listed group confirmed that annual underlying earnings before interest tax, depreciation and amortisation (EBITDA) on constant currency basis is expected to reach about €750 million, from €731 million last year.

At the time, Bond said, "The trading environment deteriorated significantly in the last quarter across Pepco's markets, notably in Central and Eastern Europe, with weaker sales, a lower than forecast gross margin and higher costs, resulting in a reduced level of profitability in our core markets, which we are addressing."

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