Pepco Group has 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 group opened a record 343 new stores in the fourth quarter ended September 30, with 668 openings in total during the full year, exceeding the group's minimum target of at least 550 net new openings.
The Warsaw-listed group, which owns the Pepco, Poundland and Dealz brands, 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.
Last month, Pepco shares posted a record drop after it downgraded its profit outlook twice within a couple of weeks. However, the group is still set to report its highest-ever EBITDA.
'Challenging Market Backdrop'
"Group performance over the past year has been mixed against a challenging market backdrop. We opened a record number of new stores and delivered strong double-digit revenue growth resulting in record group revenues," executive chair Andy Bond said in the statement.
"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."
The company's sales dropped during the quarter, as the landing of Pepco's autumn/winter collection in stores had coincided with record warm weather in Poland and adjacent markets, resulting in weaker demand.
The fourth-quarter like-for-like revenue growth came in at 0.2%, with annual growth at 6.0%.
For the full year, the group's revenue rose 17.7% to a record €5.65 billion, driven by Pepco's growth of 24.8% and 8.4% for Poundland.