Pepco powers ahead in latest year, despite pandemic impact
European budget-focused retailer Pepco Group has reported a strong annual revenue rise and forecast profits at the upper end of market expectations.
The listed business talked of “strong trading and strategic progress achieved, despite a challenging Covid-impacted trading environment”.
The company, which owns the Poundland, Pepco and Dealz chains and also sells the Pep&Co clothing line, is growing fast and the year to September 30 saw group revenue up 19.4% at €4.122 billion year-on-year, led by the Pepco chain with 29.2% growth.
Like-for-like (LFL) growth was also impressive at 6.5% with the Pepco chain 9.8% ahead for the year and 10.2% for Q4. Poundland and Dealz weren’t quite as buoyant with 3.1% LFL growth for the year but only 1% for Q4.
Full-year underlying EBITDA should be between €640 million and €655 million, and the mid-point of that range would mean growth of around 45% compared to the Covid-impacted prior year.
The company said it’s been making strategic progress towards growth with “significant” new store expansion continuing across all trading brands. Openings are in line with guidance with 424 net new stores opened in the year. There have been 364 Pepco openings (a 17.3% rise) and 60 Poundland and Dealz stores (a 6.5% rise).
Group CEO Andy Bond said: “We delivered another strong trading performance and made good progress against our strategic plans during the year. Despite the operational challenges from Covid disruption, we continued to open new stores across all three of our brands [with] a record number of annual openings.
“We are encouraged by the initial performance of the Western European Pepco stores across [new markets] Italy, Austria and Spain. We are also pleased by the results of our store renewal programme in driving our LFL performance and enhancing the customer experience.”
But he added that as consumer demand and business activity returned following Covid impacts, "pressure on global supply chains has increased with reduced raw material availability leading to commodity inflation, further compounded by constrained container capacity which significantly increased shipping costs from the final quarter”. That said, it has “taken operational action to mitigate these impacts”.
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