Pepco Group, a leading budget retail powerhouse, has demonstrated remarkable resilience with robust revenue growth for the full year, especially in the fourth quarter ending on September 30, despite significant Q4 challenges that prompted management changes.
As the parent company of Pepco, Poundland, and Dealz, Pepco Group proudly reports a record-breaking full-year group revenue of €5.649 billion, signifying a remarkable 17.7% increase on a constant currency basis. This impressive performance is fueled by Pepco’s exceptional 24.8% growth and Poundland Group’s strong 8.4% increase.
Furthermore, the full-year underlying EBITDA (based on IFRS 16) is expected to reach approximately €750 million, surpassing the €731 million reported the previous year.
In Q4, the group achieved a remarkable revenue of €1.441 billion, marking a substantial 12.5% year-on-year increase on a constant currency basis, with both Pepco and Poundland Group posting significant growth.
It’s important to note that, while group like-for-like (LFL) revenues remained flat in Q4, they impressively surged by 6% throughout the year. However, Pepco faced a 2.4% decline in LFL revenue during Q4 due to challenging trading conditions, with LFL revenue turning negative in August and further deteriorating in September.
Pepco’s remarkable performance was significantly enhanced by the opening of more stores than initially anticipated. The fourth quarter alone witnessed a record-breaking 343 new store openings, contributing to a grand total of 668 store openings throughout the year.
In acknowledging the company’s performance in the face of a challenging market backdrop, Executive Chair Andy Bond emphasized the record-breaking number of store openings and strong double-digit revenue growth. Despite a challenging trading environment in the last quarter, Bond remains optimistic and is addressing the hurdles faced.
While Pepco may not be primarily recognized as a fashion retailer, its Pep&Co line has made substantial inroads in this sector. However, like other retailers, Pepco faced unexpected challenges when its AW23 collection coincided with unusually warm weather in many markets, impacting demand, even for its ultra-budget offerings.
Despite these challenges, the company maintains a positive outlook, with a commitment to reaping the benefits of its ambitious store opening program over the next 12 months.
These store openings will have a strong fashion focus. For instance, in September, Poundland took over up to 71 Wilko store leases in the UK. They have already reopened 20 Wilko stores as Poundland stores and plan to continue opening stores at these locations in the coming weeks.
Pepco Group anticipates these stores to trade through the crucial fourth quarter of 2023, carrying the new range of Pepco clothing in addition to the extensive FMCG and general merchandise ranges for which Poundland is renowned.