European discount retailer Pepco Group has further downgraded its forecast for 2023, estimating that underlying EBITDA for the period will be about €750 million, compared with last year's €731 million.
The group lowered its outlook amidst a weaker-than-expected sales performance, continued inflationary pressure on costs, and the drag from investment in new stores, it said.
The new forecast implies growth this year of about 2.9%, compared with its prior forecast for high single-digit growth.
The retailer, which owns brands such as Pepco, Poundland, and Dealz, has also failed to see a recovery in gross margins, as it continued to struggle with the sale of inventory that had been bought at a higher cost earlier in the year.
This is the second downgrade in recent weeks. The group also said the managing director of its Pepco business, Anand Patel, will step down immediately in a move to reorient management structure.
Patel will be replaced by the current managing director of Poundland, Barry Williams, while COO Austin Cooke will assume an executive role for the Poundland business.
Group Executive Committee
To accelerate its strategy to transform into a single business with a focus on core markets, the retailer has established a group executive committee, whose goal is to concentrate on costs and initiatives that will generate returns in the near term.
"It is clear that we need to refocus on delivering for our customers in our core business while delivering more measured growth. We need to improve profitability and cash generation in our established business alongside a more targeted growth plan in markets where we have an existing presence", executive chairman Andy Bond said in a statement.