Following today’s release of The Pepco Group’s figures for the 51 weeks ending 22nd 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 that it anticipates group l-f-l revenues to be down 3.1% for the year. This highlights the extent to which its revenue growth of 10.0% for 51 weeks of its FY2023/24 has been driven by store openings in its core Central European markets, rather than its price position and core product proposition. The group expects to finish the year with 390 net new stores, building on the net 556 new stores it opened in FY2022/23. This is particularly true of its UK Poundland fascia which has been hit by the unexpected underperformance of its Pepco-sourced clothing and GM range throughout the year, where an uplift in sales had originally been anticipated by the group in its H2.
“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. Poundland must 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 is rolling out to the rest of the UK by the end of 2024 following pilots in Northern Ireland and the Isle of Wight.
“Although Pepco has faced issues, it anticipates that group revenue will be more than €6bn for the year, driven primarily by a stronger performance in its H1. Crucially, due to tight fiscal discipline around investments and operations, such as closing 19 underperforming Poundland stores in its Q3, the group expects full year underlying EBITDA of €900m, an improvement of around 20% on its €753m EBITDA achievement in FY2022/23.”
