Pepco Group sales rise, Poundland is strongest chain
There’s good progress when it comes to expanding, and then there’s Pepco progress. The pan-European variety value retailer said Thursday that store expansion “accelerated” in its first quarter to 31 December.
And how. It opened 161 new stores in the period (its strongest ever, it noted), including 55 in “strategically important” Western European markets “which continue to trade ahead of expectations”. There was even time to upgrade 362 stores.
The company operates the Poundland banner in the UK plus Pepco and Dealz stores in Europe, and also makes and sells the Pep&Co fashion line.
Alongside its impressive growth and regeneration, the group posted a 12% rise in total revenue on a constant currency basis to €1.35 billion across the October-December period. That was driven by a strong performance at its core Pepco banner that saw a 20% revenue jump, mostly on the back of new stores.
However, the group, which listed on the Warsaw stock exchange last May, had a tougher time when it came to like-for-like sales, rising just 0.7%, with its core Pepco brand like-for-likes coming in flat.
But for its UK-based Poundland Group, like-for-like sales rose 1.5% in the quarter, “reflecting continued positive progress across all aspects of Poundland’s offer development programme, including range improvements in general merchandise and clothing [and] further expansion of multi-price penetration to 41.5%”.
It also said Poundland successfully renegotiated 30 store leases, reducing passing rent by an average of 22%.
And Pepco noted the overall performance for the business could have been better had it not been for supply chain issues and demand challenges presented by Covid hitting its trading performance.
Indeed, the latter saw the extension of trading restrictions across many of the territories in mainland Europe “which had a significant impact on the level of customer footfall”.
Chief executive Andy Bond, who is set to step down at the end of March due to health reasons, said in a statement: “It is particularly pleasing that despite the supply chain and demand challenges presented by Covid-19, the strength of the consumer proposition of all three of our brands ensured that we delivered a resilient trading performance. We believe that the supply chain pressures that impacted our first quarter will now subside.
"However, given the broader inflationary pressures faced by our core consumer, we are committed to supporting them by preserving the majority of our existing price points and therefore strengthening our price leadership position.”
Commenting on the Poundland performance, Juliet Cuell, Retail Analyst at GlobalData, said: “While Poundland achieved positive LFL revenue growth and outperformed its parent, Pepco Group, its limited online offer in the UK hampered its performance.
"Although Poundland launched a UK website delivering items to 11 cities in June 2021, it has not rolled this out to other major towns and it must consider this as high street footfall has not returned to 2019 levels."
She added: "Poundland has wisely increased its product range, creating more shop-in-shops of Pep&Co homewares. This will resonate well with shoppers looking to trade down and cut back as sentiment regarding future personal finances worsens amid rising inflation.”
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