Continued strong revenue growth drives revenue above €3bn
European discount retail group, Pepkor Europe, owner of the PEPCO and Dealz brands in Europe and Poundland in the UK, today reports a trading update for the final quarter and year ended 30 September 2018.
Continued expansion of the PEPCO format together with positive like-for-like growth2 in each of our established trading divisions saw continued strong total revenue growth increasing by 10.6 per cent for the full year and 12.9 per cent in the final quarter. This underlying growth was partially offset by the closure, in the UK, of around 60 poorly performing former 99p stores in February and March 2017.
The delivery of strong like-for-like growth in both Poundland and PEPCO is pleasing. The growth achieved in Poundland, driven primarily by the successful introduction of PEP&CO3 clothing ‘shop-in-shops’ in over 300 stores, outperformed the wider UK high street, while PEPCO delivered strong like-for-like growth despite the ongoing disruption caused by the phased introduction of the Sunday trading ban in Poland in March 2018.
At the close of the year the Group traded from 2,360 stores, an increase of 12.6 per cent over the year. Specifically, PEPCO expanded its store portfolio by 23.6 per cent year-on-year having opened 286 new stores in the year including the brand’s 200th store in Romania. PEPCO now operates 1,499 stores in 10 territories.
Disciplined store expansion in each of our trading formats will continue in the current financial year, including PEPCO’s entry to the Bulgarian market through an initial 10 stores.
The European Dealz business continues to develop in line with our plan. Spain continues to perform well delivering positive like-for-like performance, with a full fashion offer introduced in four stores. Reflecting the Group’s established knowledge of the market, the Polish business, which now operates from eight stores, shows encouraging early signs.
Commenting on the results, Andy Bond, CEO Pepkor Europe, said:
“We ended the financial year very strongly, as our key brands focused uncompromisingly on the delivery of their respective business plans. Poundland’s return to like-for-like growth is encouraging and the continued growth of PEPCO clearly evidences the broad appeal of their value for money proposition in existing and new markets.
“Although relatively small, the performance of our Dealz businesses in both Spain and Poland are particularly pleasing.
“Each of the Group’s brands sit within a core discount segment that is attractive to customers and growing at levels similar to that experienced online. Our established businesses are also financially strong, being profitable and cash generative. With a clear strategy in place, we are excited about our prospects for continued growth across Europe.”
1. Revenues, which are unaudited at this point, reflect the following:
– Foreign currency revenues are translated at the average rate for the month in which they are made.
– Poundland traded for 53 weeks in FY17. A proforma adjustment has been made to these results to make them comparable to the current year.
2. Like-for-like sales growth is defined as year-on-year sales growth for stores open beyond their normal trading anniversary. Reflecting the varying maturity of the Group’s brands and differing trading dynamics between markets this varies between 12 and 14 months from opening.
3. The PEP&CO clothing brand is now present in over 300 stores across the UK and Republic of Ireland and has established Poundland as a top 20 UK volume fashion retailer less than three years after PEP&CO was launched.