Pepco Group Reports Strong Peak Trading Performance In Q1

The fast-growing pan-European variety discount retailer, Pepco Group, owner of the PEPCO and Dealz brands in Europe and Poundland in the United Kingdom (UK), today reports a trading update for the first quarter ending December 2019.

Group

The first quarter, which represents approximately one third(4) of full year revenue and contributes a more significant proportion of earnings, saw continued strong total revenue growth of 13.3%. This was driven both by the ongoing expansion of the Group’s PEPCO and Dealz formats in Europe where, at the close of the quarter, the Group traded from 2,809 stores, an increase of 14.8% over the year, and by continued like-for-like (LFL) growth of 3.9%. 

The Group continued to make strong strategic progress through increasing the size of the PEPCO store portfolio in Central and Eastern Europe (CEE), commencing the roll-out of the Dealz format in both Poland and Spain, and reducing operating costs within Poundland, including the successful renegotiation of a further 36 store leases. 

PEPCO

PEPCO expanded its store portfolio by over 20% year-on-year, opening 94 net new stores in the quarter. In addition, it upsized or relocated a further 23 stores. Recognising the identified future store capacity in all the territories that it operates, PEPCO opened stores in 10 of the 11 CEE countries including a further 12 stores in Bulgaria increasing the portfolio there to 32 stores, less than a year after the first store was opened. We continue to expect to open around 300 PEPCO stores in the full financial year. 

Having been evaluated as a highly attractive incremental expansion opportunity, PEPCO will open its first store in Italy in April as part of its plan to build to a trial scale of up to ten stores by the end of the calendar year. 

When set against challenging comparatives, the continued strong LFL growth in PEPCO, which results in a two-year LFL of over 17%, is particularly pleasing. PEPCO’s growth reflects the continued investment in the customer offer with toys, benefitting from earlier introduction into stores and a widened product offer, and seasonal decorations performing particularly strongly. 

Poundland / Dealz

In the context of a weak consumer back drop, LFL growth of 1.3% in Poundland is considered likely to have resulted in further market share gains. This performance included Poundland’s record trading day on 23rd December 2019 where it served almost 1.6m customers. Revenue benefitted from the continued strong performance of the PEP&CO clothing brand, which is now present in 301 UK and Republic of Ireland (ROI) stores, and the progressive introduction of extended product ranges at price points above and below the £1 anchor price point within the core health and beauty, household and grocery categories. 

The mainland European Dealz business continues to develop positively, building the necessary confidence in both the customer proposition and the business model economics to commence a store roll-out programme. In the quarter, 22 stores were opened, increasing the portfolio by over 40% versus the year-end position. We intend to open up to 50 new stores in the full financial year. 

Commenting on the results, Andy Bond, CEO Pepco Group, said:

“Pepco Group has continued to deliver operational and strategic progress, in this important trading quarter, reflecting our clear growth strategy, centred on the significant long-term opportunity for further PEPCO stores in central Europe, together with a focus on day-to-day retail execution. This combination has secured another quarter of strong revenue growth, both in total and like-for-like terms, in each of the Group’s brands. 

With an established strategy, leading customer proposition within a structurally advantaged discount retail segment and a strong financial base, we remain confident about our prospects for continued growth across Europe in the balance of the financial year and beyond.”

Source : Pepco Group

Image : Grand Warszawski/Shutterstock

For all the very latest news and intelligence on the UK's largest home improvement and garden retailers, sign up for the Insight DIY weekly newsletter.