Pepco Group, the owner of the PEPCO and Dealz brands in Europe and Poundland in the UK, has stated that it plans to continue with its rapid expansion programme despite the tough trading conditions.
In a brief pre-close trading statement, the company revealed that its total revenues rose 17.4% to €4.82bn during the year to 30 September, driven by a record 516 stores openings.
The PEPCO operation saw revenues grow 28.7% to €2.71bn after 446 openings took its store count to 2,910. Like-for-like sales rose 7.4%, aided by the revamp of 598 outlets.
In the Poundland/Dealz unit, total revenues rose 5% to €2.11bn after 70 new sites took its store tally to 1,051. Like-for-like sales increased 2.6% after the business continued with its store refit programme and expanded its product range.
Pepco stated that following an “encouraging performance” in new and existing markets, it was further accelerating its store expansion programme and is now targeting opening at least 550 net new stores during its next financial year. This will include entry into the new territories of Greece and Portugal for the PEPCO brand.
Over the last year, the discount giant has been converting the Dealz format in Spain to PEPCO brand. It has also been trialling a small number of PEPCO-branded stores in the Republic of Ireland by converting existing Dealz stores. The group noted that initial feedback from the first trial store in Dublin had been “exceptionally positive”, with it planning further reviews of customer reaction before making any further decision.
Meanwhile, the group stated that demand for its products has remained strong even against the backdrop of uncertainty in the macroeconomic environment. It added that the outlook across the UK remains “challenging” as constraints on consumers’ disposable income continue. However, the retailer highlighted that its value-led proposition becomes even more relevant during challenging times and it was continuing to attract new customers across Europe.
Pepco also noted that supply-side conditions in retail have been more positive recently, with some easing of freight costs. However, it stressed that supply chains are not yet fully recovered from the pandemic.
Trevor Masters, CEO of Pepco Group, commented: “These are very challenging times for families across Europe, and we remain absolutely committed to helping customers on a budget by offering great range, value and convenience – and we are confident this will enable us to expand our customer base going forward.
“After another year of good progress, we are accelerating our profitable store-expansion programme – our biggest source of value creation – and store refit strategy, helping to drive like-for-like sales growth.
“We will continue to drive our business using our four key strategic levers – bigger, better, simpler and cheaper. This strategy is driving faster growth through accelerated store openings and innovation to improve each store for customers and colleagues, helping to further enhance our LFL performance. We are also deploying these levers to lower our cost structure – to be significantly cheaper and more efficient – and improve back-office structure and processes. This strategic focus has served us well in growing sales and delivering on EBITDA and cash generation. We are accelerating our strategy in order to capitalise on the opportunities available to us in these volatile market conditions.
“Our progress to date gives us confidence that this continued expansion of our estate will enable us to achieve greater scale economies across the group and drive further efficiency savings. As a result of our continued focus on driving progress under our key strategic pillars, we remain confident of our ability to continue to grow our EBITDA, in line with our historic run-rate, in the absence of any further deterioration of macro-economic trading conditions.”
NAM Implications:
- Talk about right place, right time…
- Think about it:
- Revenue growth 28.7% to €2.71bn…
- …plus a respectable like-for-like sales increase of 7.4%.
- i.e. if you can fit within their four key strategic levers – bigger, better, simpler and cheaper.
- Working with Poundland has to be a no brainer…
