Strategic progress underpinning growth
Pepco Group, the fast-growing pan-European variety discount retailer, today reports interim results for the six-month period to 31 March 2023.1
· Strong trading momentum continued across all formats in H1
o Like-for-like (“LFL”) sales +11.1%, Pepco +15.8% and Poundland Group +4.9%
· H1 financial performance ahead of last year on a constant currency basis
o Revenue up 22.8% to €2.8bn and underlying EBITDA up 11.0% to €377m
· Total number of stores at end of H1 at 4,127, up 12% year-on-year (“YoY”), driven by growth of Pepco in Western Europe
· On track to open at least 550 net new stores during current financial year
· The Group remains confident on the EBITDA outlook for full year with no change to previous guidance
· H1 Group revenue of €2,839m, growing +22.8% YoY at constant currency
· LFL revenue growth of +11.1% during period (Q1 +13.0%, Q2 +8.5%)
· Gross margin of 40.1% in H1 represents an anticipated trough in margin performance, with recovery expected in H2 as cost input inflation eases
· Underlying EBITDA (IFRS 16) of €377m up 11.0% YoY at constant currency
· Underlying PBT of €134m down 5.7% YoY at constant currency, reflecting investment in stores, expansion and related supply chain costs, alongside higher inflation
· Net debt at end of H1 was €383m (IAS 17), representing 0.9x LTM EBITDA leverage
Commenting on the results, Trevor Masters, CEO of Pepco Group, said:
“The Group continued to make strong progress against our strategic objectives over the half year, while delivering an increase in revenues and underlying EBITDA. We opened 166 net new stores in the period and are confident on meeting our target of at least 550 net new stores this financial year, as part of our targeted and profitable opening programme.
“Our growth strategy in Western Europe is progressing well, reflecting the strong appeal of the Pepco brand to customers across the whole continent. Italy, where we recently opened our 100th store, and Spain – which is benefiting from our combined clothing, general merchandise and FMCG offer – continue to be our largest and fastest-growing Western European territories. In May, we were delighted to launch the Pepco brand in Portugal.
“As we highlighted previously, inflation remains at elevated levels in Central Europe, against which trading in Pepco stores has remained challenging during the third quarter to date. Despite this, we have continued to do the right thing for customers on a budget by maintaining our price leadership and growing our market share, while focusing on the cost of doing business in these inflationary times.
“We remain well positioned and in the second half will see gross margins trending upwards, as we benefit from the tailwinds on certain input costs, including commodity and freight. We are focused on executing our strategy and remain on track to deliver full year EBITDA growth in line with previous guidance. I would like to recognise our colleagues and suppliers across the business and thank them for their hard work and commitment to serving our customers.”
Pepco Group will host a conference call for analysts and investors to discuss its H1 interim results on Tuesday 6 June 2023 at 8.30am BST (9.30am CEST). Investors and analysts who would like to participate in the Q&A session can dial in using the relevant number below and quote “Pepco Half Year Results“.
|Poland||+48 22 397 9053|
|United Kingdom||+44 (0) 33 0551 0200 / +44 (0) 808 109 0700|
|United States||+1 786-697-3501|
Alternatively, a live audio webcast of the call will be available via the following link:
The Group intends to issue the following updates in the near future:
• Q3 FY23 trading update: 13 July 2023
• Q4 FY23 trading update: 12 October 2023
• Poland store visit and business modelling session: Autumn 2023