Following the release of The Pepco Group’s figures for the three months ending 31st December 2023; Sophie Mitchell, Retail Analyst at GlobalData, a leading data and analytics company, offers her view: “Up against a strong set of comparatives, Pepco Group has reported Q1 FY2023/24 constant currency revenue growth of 10.8%, however like-for-like (l-f-l) revenue was disappointing, declining 2.3%. Following on from a sales slowdown in Q4 FY2022/23, the group’s Pepco facia took a further hit, with l-f-l sales down 3.7%, as tougher trading conditions have meant it has struggled to match its stellar performance in Q1 2022/23, where sales increased 19.7%.
“The jewel in Pepco Group’s crown this quarter was Poundland, who saw l-f-l sales increase 0.9%, driven by strong Christmas demand for FMCG but hindered slightly by a weaker performance in clothing. Poundland’s performance was similar to that of rivals B&M’s who also saw a deceleration in sales, despite a positive l-f-l growth figure of 1.2% over a similar period, indicating the difficulty the retailers have faced in matching such strong performances seen in the previous financial years. Alongside its FMCG performance, Poundland’s sales growth was driven by its high number of store openings through the period, bringing the Poundland offer to more consumers across the UK. The group opened 77 gross new Poundland stores in its Q1, aided by the conversion of 54 ex-Wilko stores. Having opened 203 net new stores in the period across the group, store openings are expected to slow in the coming quarters, however the group still plans to open at least 400 net new stores, excluding the Wilko conversions in the UK.
“The group remains cautiously optimistic for the remainder of the financial year as a range of factors with conflicting impacts on the groups revenue could come into play, such as easing input costs, an improvement in FX and buying margin improvements but also the potential for the situation in the Red Sea to cause future freight costs and delays. A positive performance in the year ahead is therefore not a guarantee, especially not to the extent it was when consumers were in the depths for the cost-of-living crisis. The group’s facias must continue to be competitive in price, offer on trend products and be highly strategic in their location openings in order to remain competitive with rivals.”
