Pepco Group, the owner of European discount chains Poundland, Dealz, and PEPCO, has posted robust third-quarter results as it continued to attract cash-strapped shoppers to its rapidly expanding store estate.
Over the three months to 30 June, group revenues were up 17.1% to €1.21bn, driven by like-for-like growth of 4.9% and the addition of 350 new stores in the year to date.
The PEPCO chain delivered the fastest growth, up 28.5% to €704m due to strong performance in Hungary, Czechia and Serbia. The division’s like-for-like sales grew 7.3%, whilst store numbers increased by 109 during the quarter to 2,775.
Meanwhile, the Poundland/Dealz operation saw revenues increase 3.8% to €507m, with like-for-likes up 2%.
The group noted that when compared with the same pre-Covid quarter in 2019, average store sales at PEPCO are 9.2% like-for-like. Similarly, Poundland’s have grown 5.6%.
Pepco also announced today that following trials in Spain, it will now be converting its existing Dealz stores in the country to the Pepco format and adding an FMCG offering where space allows.
Overall, Pepco is on track to deliver its upgraded target of 450 net new stores during its current financial year – up from a previous target of 350 that has already been achieved.
Recent industry data suggests that discount chains are set to benefit as shoppers seek value amid inflationary pressures. Pepco stated today that the discount sector is now more prominent than during the last financial crisis, with it committed to investing in its price proposition, partly funded by a focus on reducing operational costs. Last month, Poundland revealed that it was increasing the number of products it sells for a pound, having shifted towards a multi-price offering in recent years.
Looking ahead, the group stated that it remains on track to meet its full-year guidance despite the difficult trading conditions.
“The group has delivered another quarter of good progress and resilient trading performance, driven by its successful and proven strategy,” said Chief Executive Trevor Masters.
“Despite the challenging market environment, Pepco continues to accelerate and deliver against its successful growth strategy based around our four key pillars: bigger, better, simpler and cheaper. We remain confident in the strength of our customer proposition, market positioning and our ability to drive long-term value creation.”
NAM Implications:
- Anyone surprised by these results…
- …may be missing a trick.
- If in doubt, examine the like-for-likes…
- …and the opportunities can only increase…
- …as more inflation emerges from the pipeline.
- (only real problem for suppliers is ensuring they can produce an SKU size that makes a profit at £1…)
