Retail

Pepco’s First Half Earnings Boosted By New Store Openings

By Reuters
Pepco’s First Half Earnings Boosted By New Store Openings

Pepco has reported a 28% rise in first-half core earnings, reflecting new store openings and an improved gross margin, it was reported on Thursday.

As a result, European discount retailer forecast growth for the full year.

The Dealz and Poundland owner, which offered profit warnings last year, delayed the publication of results due to a technical glitch in the company’s headquarters in Poland.

It said underlying earnings before interest, tax, depreciation and amortisation (EBITDA) was €487 million in the six months to 31 March, on revenue up 13.8% to €3.2 billion.

Gross margin increased 310 basis points to 43.1%.

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The group opened a net 289 stores in the period, mainly in the Central and Easter European (CEE) markets.

Executive chair of the company Andy Bond cautioned that “consumer sentiment in some of our key markets remains challenging.”

However, he forecast underlying EBITDA for the 2023/24 year in the region of €900 million, up from €753 million in the previous year.

Bond said that the performance of Poundland in the UK “was behind expectations,” reflecting challenges in changing ranges to Pepco products, “which we are addressing.”

He added that the margin uplift partly reflected a more normalised environment for commodity prices, foreign exchange and freight costs compared to the prior year.

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This was notwithstanding some impact from disruption to shipping in the Red Sea.

In February, Pepco said it would exit the Austrian market and reported its Hungarian business had lost about €15.5 million in a phishing attack.

Last month, the group announced the appointment of the former chief executive of optical retailer GrandVision Stephan Borchert as CEO effective from 1 July.

Read More: Pepco Reports That Trading Environment Remains Challenging

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