Following today’s release of The Pepco Group’s figures for the year ending 30th September 2024; Sophie Mitchell, retail analyst at GlobalData, a leading data and analytics company, offers her view: “Following a decline in like-for-like (l-f-l) group revenues of 4.3% in its Q3, the Pepco group has today announced group l-f-l revenues down 3.2% for its FY2023/24. This highlights the extent to which its revenue growth of 8.1% has been driven by store openings in its core Central European markets, rather than heightened demand from its price position and core product proposition. The group finished the year with 392 net new stores, building on the net 556 new stores it opened in FY2022/23. The group’s Poundland fascia however had a poor financial year. It saw declines in both l-f-l and constant currency revenues, highlighting that the 13 net new openings and growth in FMCG categories were not enough to compensate for the unexpected underperformance of its Pepco-sourced clothing and GM range throughout the year.
“For the group to see an improvement in the performance of its Poundland fascia in its FY2024/25, Pepco must rethink its range strategy in its Poundland stores as it addresses a very different market to that of its Central European arm. The group has stated that it needs to address issues with sizing within its clothing range and other product offer issues within its GM range, such as a lack of seasonal and DIY products. However, Poundland must also reconsider the mix of products it has in its stores, avoiding allocating too much space to clothing until awareness of its ranges has improved. Ensuring its clothing range is displayed attractively at the front of stores could aid awareness initially. Additionally, the Pepco clothing range in the UK will be competing with grocers, who often attract grocery shoppers to their clothing ranges through loyalty scheme offers or ad-hoc discounts. Poundland must therefore make its clothing range competitive with this, utilizing the loyalty scheme it rolled out in the UK in October 2024 following pilots in Northern Ireland and the Isle of Wight.
“Although Pepco has faced issues, it has managed to deliver full year underlying EBITDA of €944m, an improvement of around 25% on its EBITDA achievement in FY2022/23 due to tight fiscal discipline around investments and operations. The group’s healthy balance sheet will be essential to address weaknesses in its fascias in FY2024/25, especially Poundland which the group has stated has continued to see like-for-like sales declines in the first nine weeks of its new financial year.”
