Strong strategic progress and trading growth achieved despite a challenging trading environment.
The fast-growing pan-European variety discount retailer, Pepco Group, owner of the PEPCO and Dealz brands in Europe and Poundland in the UK, today reports an update for the second trading quarter and first half ending 31st March 20221.
Summary Financial Performance
· First half Group revenue2 of €2,371m, +17.5%3 year on year (“YoY”) led by PEPCO delivering +28.9% growth.
· Strong Group half year like-for-like (“LFL”)4 of 5.3% driven by accelerated LFL of +12.1% in the Second Quarter:
o PEPCO: +18.5% LFL in Q2, +7.2% LFL growth in the half year.
o Poundland Group: +5.9% LFL in Q2, +3.3% LFL growth in the half year.
· Half-year underlying EBITDA5 is anticipated to be within a range of €342m to €350m. Within this range, the Group remains on track to meet guidance for the full year in the absence of any further significant deterioration in the macro environment.
Growth Focused Strategic Progress.
· Significant new store expansion continues across all trading brands. Openings are ahead of guidance (historic run rate) with 235 net new stores opened in the half year, excluding the impact of 43 Fultons stores closed following acquisition:
o PEPCO: a record 202 net new store openings, including 84 in the Western European markets of Austria, Italy and Spain, where initial performance remains strong.
o Poundland Group: 33 net new stores, representing an increase of 6.7% YOY
· 586 store renewals completed YTD (534 PEPCO, 52 Poundland) upgrading stores layout and environment, driving LFL sales growth and positive customer perception (1,900 completed since 2019).
Trading Context & Performance
The first half continued to see the ongoing impact of Covid-19 restrictions on our stores. However, by the end of the half restrictions had eased, with the Group March exit LFL rate of 19.4% demonstrating the strong underlying customer demand for the Group’s offer supporting our confidence for the second half.
On the 31st March Andy Bond stood down as Group CEO and Trevor Masters assumed responsibility for the CEO role on an interim basis.
Commenting on the results, Trevor Masters, Interim CEO Pepco Group, said:
“We are very pleased with this set of results, considering the global disruption faced by our business. We have maintained our focus on our strategic priorities, in particular our new store growth and our continued re-fit programme, both of which continue to delight our customers and deliver strong financial performances. I would
also like to take this opportunity to thank the Pepco team for their resilience and commitment to serving our customers.
“Whilst the impact of Covid-19 progressively eased over the second quarter, the invasion of Ukraine, a country which borders three of our largest operating territories, created further volatility and unpredictability. In response, the Group and our colleagues hae donated a generous amount of money to two charities who we have worked with over the past two years to provide relief directly to the people of Ukraine and those at the border of Poland. We have utilised our employee assistance schemes to support our impacted colleagues and introduced paid volunteering days for our staff based in the CEE.
“We will continue to drive our significant growth agenda whilst reducing our cost of doing business. This will enable us to offset the majority of our input inflation allowing us to protect prices for our cost conscious customers. The market within which we operate is likely to remain volatile in the near term, due to the situation in Ukraine and ongoing global inflationary pressures. However, we have a clear and successful strategy to deliver on our sizeable long-term growth opportunities. In the absence of any further significant deterioration in the macro environment, we remain confident of delivering in line with our profit guidance.”