Pepco Group H1 revenues rise but profit hit by Covid-19

In an interim business update for the six months to March 31, 2020, Pepco Group, owner of the Pepco and Dealz brands in Europe and Poundland in the United Kingdom said that the company saw revenue growth of 9.7 percent to 1,912 million euros from space expansion in Pepco & Dealz brands plus positive LFL growth. The company said in a statement that PBT of 89 million euros reflects Covid-19 impact in March with significantly reduced store trading footprint and footfall, however group’s balance sheet remains strong with net debt of 478 million euros, representing 1.5x last twelve months EBITDA.

“It is pleasing to report continued strong operational, strategic and financial progress made by all parts of the Pepco Group before the impact of Covid. We continued our store expansion programme, delivered compelling like-for-like sales growth and converted sales to profit, while at the same time investing in infrastructure and maintaining our price leadership position within the European discount variety retailing sector. Looking forward, the consumer outlook remains uncertain and our plans reflect our expectation of a ‘new normal’ trading environment once we all emerge from the Covid virus,” said Andy Bond, CEO Pepco Group.

Pepco Group revenues and profit increase in pre-Covid period

In the five-month period to the end of February 2020, prior to Covid-19 period, the company further said, group revenue increased 14.4 percent to 1,705 million euros driven by continued expansion of the Pepco brand in Central Europe with positive like-for-like revenue growth in all brands including Pepco at 8.1 percent and Poundland & Dealz at 2.2 percent. PBT of 116 million euros represented 21.8 percent year-on-year growth reflecting the benefit of continued cost leverage.

Commenting on the current trading, Pepco said, revenue is returning to pre-Covid levels with 99 percent of group stores now trading, although LFLs remain negative, while the group’s financial position remains strong with positive cash resources in excess of 400 million euros at June 13, 2020.

The company’s store opening programme continued, delivering strong returns on invested capital. Pepco Group opened 150 new stores in the period with Pepco opening stores in 10 of its 11 trading territories, while expansion of Dealz brand continued in Poland and Spain and stores trading at the end of March increased 60 percent to 85. The company said, closing store portfolio of 2,844, represents a year on year increase of 15 percent.

Picture credit:Finsbury