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."
