PEPKOR EUROPE Q3 RESULTS

Strong progress across Pepco and Poundland

Pepkor Europe, the European discount retail group comprising the Pepco and Poundland businesses, today reports a trading update for the nine months ended 30 June 2018.


Financial summary:


Pepkor Europe continues to grow strongly, improving its two core retail businesses (PEPCO and Poundland) and expanding into new markets. For the nine months under review, overall Pepkor Europe revenue grew by +8% to €2,273 million, with overall like-for-like sales a robust +3.7%.


Net 185 stores were opened during the period under review (including +77 new store openings and -6 store closures in 3Q18), with total stores at 30 June 2018 at 2,281.


Pepco

Pepco operates 1,410 shops in 10 countries across CEE including Poland, Romania, Hungary and the Czech Republic. Sales grew strongly for the first nine months of FY2018 with total revenue for the period of €949m, up 35.5% on last year and like-for-like sales up by 8%. This was achieved despite the headwind created by the beginning of the Sunday trading ban in Poland which was introduced in March 2018.


Pepco opened a net 71 stores in the nine-month period. The opening of two stores in Estonia as part of Pepco’s continued international expansion means that the business established a presence in all three Baltic states (Estonia, Latvia and Lithuania) in a seven-month period.


Poundland


Poundland operates nearly 850 stores across the UK and the Republic of Ireland, together with eight Dealz stores in Spain, five in France and four in Poland. Poundland’s total revenue for the period of €1,324m, reflects approximately 60 store closures in the 2017 comparative period.


Like-for-like sales recovered through the third quarter after being initially impacted in April by an early Easter. This outperformed the wider UK high street where footfall was flat to -6%. Poundland’s sales momentum has strengthened further in the first two months of the fourth quarter.


The roll-out of PEP&CO shop-in-shops has continued with an additional 175 sites added in the period under review (total at 30 June 2018 of 274), including the completion of the programme in the Republic of Ireland. Performance of Poundland stores with a PEP&CO shop-in-shop has been strong at +7.7% like-for-like sales in Q3, significantly above the chain average.


The European Dealz business in Spain continues to gain momentum and also launched its first three clothing shop-in-shops in Q3 supplied by PEPCO.

The Dealz Poland trial also continues to perform well and added two further stores (total in Poland at 30 June 2018 of four stores).


Andy Bond, CEO Pepkor Europe, commented:


“I’m very pleased with the progress that the business is making across the Board, undistracted by events at our parent company.


“Pepco in Europe now serves 12 million customers a month with its combination of good quality, low priced apparel and household goods. The store opening programme continues to move forward at pace, bringing PEPCO to new customers in new geographies who are responding enthusiastically to its bright, modern shopping environment, quality products and outstanding prices.


“And Poundland continues to make good strategic and operational progress to widen its appeal. It’s extending the value it can offer through additional price points and the introduction of PEP&CO fashion ‘shop-in-shops’ is giving customers a distinctive reason to shop on the high street.


“Underpinned by the introduction of tighter retailing disciplines, Poundland is changing at a pace led by its customers who are really embracing the difference.


“Both Pepco and Poundland are working increasingly closely with PGS, our global sourcing arm which is providing the ability to drive both businesses’ competitive position.


“Both retail businesses are cash generative, profitable and stable, with management teams encouraged by the strong operational progress we’re now making. This is already a significant business, serving between 35 and 40 million customers each month and we are on track towards creating a European discount variety retailer with significant reach.”

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