Deals Owner Pepco's Sales Growth Slows

By Donna Ahern
Deals Owner Pepco's Sales Growth Slows

European discount retailer Pepco Group reported a slowdown in underlying sales growth in its latest quarter on Thursday, saying it faced a challenging trading environment in April and May, particularly in Central Europe.

The Warsaw-listed group, which owns the Pepco, Poundland and Dealz brands, did, however, maintain its financial guidance for the full 2022-23 year.

It said like-for-like sales rose 2.6% in its third quarter to 30 June, after increasing 8.5% in the second quarter.

Like-for-like sales in the Pepco branded business fell 1.2% in the third quarter overall, but trading had recovered in recent weeks with a positive like-for-like performance in June and the start to the fourth quarter.

Inflation Pressure 

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European consumers have been under pressure for over a year from high inflation that has outstripped pay growth.

"The macro-economic climate continues to be challenging, particularly in Central Europe, due to elevated levels of inflation," CEO Trevor Masters, CEO, Pepco Group, said.

"In addition, Pepco’s Q3 (third quarter)growth reflected a period where the business benefited from trading upside in the prior year driven by the influx of people from the Ukraine war into its core markets."

Third quarter like-for-like sales in the Poundland Group - Poundland and Dealz - rose 9.0%, driven by consumers prioritising spend on fast moving consumer goods (FMCGs).

Total group revenue increased 12.5% on a constant currency basis to €1.37 billion, boosted by 159 new store openings.

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EBITDA Growth

The group said it expected to report full year core earnings (EBITDA) growth in the 'mid-teens' on a constant currency basis, assuming no further significant deterioration in the trading environment.

It ended the quarter with 4,286 stores, and said it remained on track to open 550 net new stores over the full year.

Shares in the group are down 8% so far this year, giving it a market capitalisation of 20.7 billion Polish zloty

Read More: Dealz Owner Pepco Expands European Roll-Out Into Portugal

News by Reuters, edited by Donna Ahern, Checkout. For more retail stories, click here. Click subscribe to sign up for the Checkout print edition.

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