Pepco Group, the owner of the Pepco, Poundland and Dealz chains, saw its fourth-quarter revenue climb 12.5% to €1.45bn after the opening of a record 343 new stores during the period. However, like-for-like sales were flat, having turned negative in August and worsening in September amid “challenging” trading conditions.
The figures come just weeks after the company cut its profit outlook for the second time due to the tough environment, with it also announcing further changes in its management team and the launch of a strategy review.
Over the quarter to 30 September, the 3,523-strong Pepco chain saw its like-for-like sales decline 2.4% amid weaker consumer demand for its key clothing and general merchandise categories within its core markets of Central and Eastern Europe. Across the full year, the unit’s sales rose 6.3% on a comparable basis and by 24.8% in total.
There was better performance in the 1,106-strong Poundland/Dealz chain, with like-for-likes increasing 4.1% in the fourth quarter. Total sales rose 5.6%, boosted by the expansion of the Dealz format in Poland.
Andy Bond, Executive Chair of Pepco Group, commented: “Group performance over the past year has been mixed against a challenging market backdrop. We opened a record number of new stores and delivered strong double-digit revenue growth, resulting in record group revenues. We will deliver profit growth year-on-year and our highest ever EBITDA outturn of approximately €750m.”
He noted that the group was “addressing” the reduced level of profitability related to the slowdown in trading in Central and Eastern Europe.
On 12 September, Pepco Group announced the unexpected resignation of its Chief Executive, Trevor Masters. The firm did not provide a reason for the decision, but it came alongside the first lowering of its earnings guidance.
Later in the month, Pepco cut its profit outlook again and announced that it was taking “immediate and decisive steps” to reorientate its management structure in light of its underperformance. As a result, Anand Patel, the Managing Director of the Pepco business, stepped down. He was replaced by Barry Williams, the Managing Director of Poundland in the UK. Austin Cooke, who was the Chief Operating Officer (COO) of Poundland, assumed the role of Managing Director of Poundland.
Pepco also revealed that it had established a new Group Executive Committee, which it said would undertake a strategy review across the business to place greater focus on addressing costs and initiatives that are likely to generate appropriate returns in the near term, accelerate its transformation into a single business and refocus on core markets.
