Executing at pace on our ‘New Pepco’ strategy

Pepco Group, a leading pan-European variety discount retailer, today announces a pre-close trading update ahead of the publication of its FY25 full year preliminary results on 10 December 2025. As a special case disclosure, the Group also provides unaudited historical pro-forma financials for the Group excluding Poundland, which was sold on 12 June 2025.

Highlights

• Full year results for the Group (excluding Poundland) in line with prior guidance
  • Revenues expected to exceed €4.5 billion (2024: €4.2 billion)
  • Underlying EBITDA (IFRS 16) y-o-y growth towards the top-end of the high single digit range
• Strong FY25 underlying net earnings delivery expected; with 9M FY25 underlying net earnings of €196m already at the full year FY24 level (€199m)
• Continue to see encouraging momentum in Pepco LFL revenues, with 51-week performance up +2.7%, led by a strong fourth quarter-to-date where LFL revenues grew +3.9%
  • Poland – Robust performance delivering positive LFL growth of +2.6% in H2 FY25 to date
  • Western Europe – LFL revenue growth of +3.2% in H2 FY25 to date; excluding FMCG, LFL up +15.6%
  • Excluding FMCG, Pepco has seen overall LFL revenue growth of +6.1% in H2 FY25 to date
• FMCG exit on track and in line with strategy outlined at the CMD in March
  • Sale of Poundland business to Gordon Brothers completed in June 2025
  • All Pepco Plus stores in Iberia now converted to standard store format, with positive initial results
• New share buyback announced, with second tranche of €50m to commence from October. This follows the completion of the first €50m tranche in August 2025 reflecting strong ongoing free cash generation
• Group called €175m of its €375 million 7.25% July 2028 senior secured notes to be settled in early October, as part of a review of external funding to extend the Group’s debt maturity profile and optimise debt pricing

Stephan Borchert, Chief Executive Officer, commented: “The last twelve months have been a transformational year for the business, as we reset our strategy and set about delivering, at pace. I’m delighted with the progress we have made, achieving key milestones this year in line with the strategy we outlined at our Capital Markets Day in March 2025. We divested Poundland and removed FMCG from the Pepco brand, enabling us to better drive growth and take tactical decisions to maximise value creation for shareholders. Our results demonstrate these were the right actions to deliver future profitable growth for Pepco. We expect to report strong FY25 revenue and underlying EBITDA, driven by significant improvements in gross margin year-on-year.

“A renewed focus on our price leadership position and product offer is resonating with customers and leading to increasing momentum in like-for-like revenue growth. Pepco’s fourth quarter trading to date has been particularly strong, with LFL revenue growing by +3.9% – our best quarterly performance for two and a half years. Our focus on driving an improved performance in Poland has resulted in an overall recovery in LFL during the second half of the year, while our Western European stores have delivered +6.7% LFL growth through the year.

“Our business is reshaped and simplified, focused on our core Pepco brand in key regions across CEE and Western Europe. The Group is now more agile to take advantage of the opportunities ahead, drive higher customer satisfaction through digital engagement and ultimately increase market share. As we finish the year in a strong position. I am confident that this solid foundation of strategic progress, combined with a focus on free cash generation and further capital returns, will drive shareholder value during the next financial year.”

Share buyback

The Group today announces that it will commence a second €50m tranche of the share buyback programme in October 2025. This follows on from the completion of the first €50m tranche in August 2025. These tranches are part of the overall €200m share buyback capability authorised for use during FY25-FY27 that was announced at the Group’s Capital Markets Day.

Priorities include a sharp focus on optimising free cash flow and thoughtful allocation of capital over time, including returns to shareholders to enhance value creation for the Group’s stock. Today’s announcement underscores the Board’s conviction that the Group’s current share price materially undervalues the Group’s future prospects and its intrinsic earnings potential. Further details on the second tranche will be published on commencement of the share buyback in October 2025.

As of 30 June 2025, the Group had leverage (pre-IFRS 16) of 0.5x, reflecting total cash of €355m and total debt of €616m.  Total available liquidity as of 30 June 2025 exceeds €700m. The Group continues to target a net leverage (pre-IFRS 16) ratio of between 0.5x to 1.5x, ensuring financial flexibility while maintaining a strong balance sheet.

Current trading

New Pepco Group revenues for the 51 weeks to 21 September 2025 are up 8.8% on a constant currency basis, driven by store expansion and Pepco-banner like-for-like revenue growth over the same period of +2.7%. This performance accelerated during the fourth quarter with Pepco banner LFLs for Q4-to-date running at +3.9%. We expect to open 84 net new stores during the fourth quarter, planning to finish the year with 248 net new stores overall, in line with prior guidance.

The Pepco banner FMCG exit has been successfully completed, with only minor planned short-term disruption in stores. This is part of our strategy to focus on our core categories of clothing and general merchandise where we generate stronger returns and higher margins and where Pepco has a competitive advantage. This includes the conversion of Pepco Plus stores in Spain and Portugal to our standard store format, as well as removing FMCG products from the ‘snake’ checkout queue in all stores across the Pepco estate. LFL revenues excluding FMCG saw growth of +7.6% in Q4-to-date, up from +4.8% in Q3 FY25. On this basis, LFL saw progressive improvement through each quarter in FY25.

Dealz LFL revenue growth in the 51 weeks to 21 September 2025 was up by +1.9%, following a tough Q4-to-date where LFL’s fell by -4.4% during the period. These weak Q4 LFL sales were primarily driven by a challenging performance in health & beauty ranges due to elevated promotional intensity across the market, alongside a weak result in soft drink sales due to unseasonally cold weather in Poland during the summer.

FY25 outlook

‘New Pepco Group’ represents the continuing Group business excluding Poundland. On this basis, the Group expects to report revenues for the full year in excess of €4.5 billion. The business has continued to benefit from strong year-on-year improvements in gross margin, driven by Pepco, continuing from the first half.  As a result, the Group expects to deliver FY25 underlying EBITDA (IFRS 16) towards the top-end of our guidance (growth y-o-y in the high single digits). We expect full year underlying net earnings growth y-o-y to significantly exceed EBITDA growth, reflecting lower interest and tax charges compared to FY24, despite absorbing, amongst other items, a one-off refinancing charge in the fourth quarter. This is underpinned by 9M FY25 underlying net income of €196m, which is already at the full year FY24 level (€199m).

Sustained discipline around store expansion and capital investment will also result in strong free cash generation, even after including the cost of various strategic transformation programmes during FY25, including the sale of Poundland, reshaping our store estate in Pepco Germany and the conversion of Pepco Plus stores in Iberia. 

CONFERENCE CALL

Pepco Group will host a conference call for analysts and investors to discuss its pre-close trading update on Thursday 25 September 2025 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“.

Alternatively, a live audio webcast of the call will be available via the following link:

https://brrmedia.news/PCO_TU

FORTHCOMING DATES

• FY25 Preliminary Results (for 12 months ending 30 September 2025): Wednesday 10 December 2025
• Q1 FY26 Trading Update: Thursday 15 January 2026