Following today’s release of The Pepco Group’s figures for the three months ending 31st March 2024; Sophie Mitchell, Retail Analyst at GlobalData, a leading data and analytics company, offers her view: “The Pepco Group has succeeded in delivering another quarter of strong growth, with revenue rising by 11.7% in constant currencies to €1,349m for its Q2 FY2023/24 as store openings and a continued attraction to its value offer bolstered its performance. Like-for-like (l-f-l) sales contracted slightly, declining 2.8% for the group for as it was unable to build upon exceptionally strong comparatives where group l-f-l revenue increased 19.7% in Q2 FY2023. Poundland witnessed revenue growth of 4.5% in constant currency but a decline of 2.8% in l-f-l revenues as it was also impacted by strong comparatives, as well as nine store closures during the period and some changes to its mix of merchandise.
“The group’s Pepco fascia performed well, with revenue growing by 14.7% in constant currency for Q2 and by 14.6% for H1 overall, due to most of the group’s store openings occurring in its core Central and Eastern Europe markets. Pepco opened 215 net new stores in H1, the largest set of openings across its fascias, which should help to drive l-f-l revenue growth in its H2, as the group has confidence in the Central and Eastern European markets it has opened them in. These figures exclude the group’s operations in Austria, due to its exit from the country in 2024 after an in-depth performance review. This exit exemplifies the Pepco Group’s laser focus on strategy and profitability, which will aid its performance in the second half of its financial year.
“Poundland’s performance was hindered by its positive FMCG sales being offset by weaker results in clothing and general merchandise as the group has phased in its Pepco range to Poundland stores, which has not yet gained traction in its UK stores. Now complete, this transition should improve gradually improve Poundland’s performance across the categories in H2, as long as it focuses on driving awareness of the new Pepco clothing and GM ranges. Poundland’s Q2 performance was also dampened slightly by most of its store openings occurring in Q1, with 81 gross new store openings across H1, largely reflecting 56 conversions from Wilko stores. Thus, l-f-l revenue was slightly better for Poundland’s H1, declining by only 0.7%. As new Poundland stores are the driving force behind growth in the UK, the group should remain focused on strategic openings to continue to compete with key competitors B&M and The Range.
“The Pepco Group has also announced today the appointment of new CEO Stephan Borchert, with Andy Bond, current Executive Chair, reverting to the role of Non-Executive Chair in October. This will likely be a good move for the group, which has operated without a CEO since 2022, when Andy Bond stepped down from the role. Borchert has extensive experience across Pepco’s categories, having held senior positions at GrandVision (owner of Vision Express), Sephora EMEA and other international multi-brand retailers spanning the beauty, apparel, and pharmacy sectors. The extensive search for a suitable executive with Europe-based experience across many of Pepco’s categories should mean Borchert is well placed to drive the group’s performance.”
