Pepco Group, the prominent European discount retailer, is making strategic shifts in response to recent profit warnings. This Warsaw-listed conglomerate, which encompasses renowned brands such as Pepco, Dealz, and Poundland, is intentionally slowing down its store expansion program to refocus on profitability.
In the upcoming 2023/2024 financial year, Pepco Group is planning to open a minimum of 400 net new stores, a conscious reduction from the 668 stores added in the previous year (2022/2023). This decision comes on the heels of ending the 2022/23 fiscal year with 4,629 stores in operation.
Alongside this moderation in store expansion, the group is launching a review of its store refit program, particularly in central and eastern Europe. These actions form part of a strategic initiative to rebuild profitability by embracing a disciplined, measured approach to growth and capital investment across the organization.
Andy Bond, the executive chairman of Pepco Group, underlines the necessity of concentrating on measured growth, stating, «We need to refocus on delivering more measured growth – doing less to achieve more – with a stronger emphasis on enhancing profitability and cash generation within our established business.»
On September 28, the company revised its profit forecast downwards, citing challenges in the trading environment of central and eastern Europe and management focus as contributing factors. Over the past year, Pepco Group’s shares have experienced a 27% decline.
Despite the current market challenges, Andy Bond expresses unwavering confidence in the group’s future. He highlights the company’s market-leading customer proposition, robust balance sheet, and resilient operating cash flow as the cornerstones that will enable Pepco Group to successfully navigate the path ahead.