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Dealz Owner Pepco Sees Pressure, Opportunity From Inflation

Published on Jul 16 2021 8:50 AM in Retail tagged: Inflation / Poundland / Dealz / Pepco Group

Dealz Owner Pepco Sees Pressure, Opportunity From Inflation

Warsaw-listed discount retailer Pepco Group could benefit from inflationary pressure in the coming quarters as people become more price-sensitive, its chief executive said on Thursday.

The group, which listed in May with a €5 billion ($5.92 billion) valuation, owns British discount retailer Poundland as well as the PEPCO and Dealz brands in Europe.

It trades from almost 3,400 stores across 16 countries and is led by CEO Andy Bond, former boss of British supermarket group Asda.

'Supply Chain Inflation'

"I think in the medium term one of our key management concerns that we will need to manage well is supply chain inflation and disruption. That will impact more next financial year," Bond told Reuters.

"...Increasing prices would be the last resort and there are lots of things we can do to mitigate: our cost base, working with suppliers," he added.

Bond said the company is well placed to manage inflationary pressure and that it could help Pepco, as customers seek out shops offering lower prices.

Pepco posted third-quarter revenue of €1.04 billion and like-for-like sales growth of 29.3%, reflecting the heavy impact of the pandemic a year earlier including shops closures.

Last month, the Poland-listed owner of Dealz reported a 16.8% increase in core earnings in the first half of its financial year, as revenue growth from new store openings offset the impact of pandemic restrictions.

Outlook

"We will deliver top and bottom line, as we promised, but one should not expect that level of like-for-like in the last quarter, because that level of like-for-like is clearly against last year when our stores were closed," Bond said.

"By contrast last year in the summer all our stores were open and there was some pent-up demand so like-for-like in the fourth quarter will be more muted," he added.

He said he did not expect a slowdown in the summer or store closures again.

News by Reuters edited by Checkout. For more Retail news click here. Click subscribe to sign up for the Checkout print edition.

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