Pepco Group, the owner of the PEPCO and Dealz brands in Europe and Poundland in the UK, said today that its full-year core profit will come in at the upper end of market expectations after robust underlying sales performance and an aggressive store opening programme drove up revenues. However, it did warn that it was having to take action to migrate the pressure from commodity inflation.
The group, which listed on the Warsaw stock market in May with a valuation of €5bn, revealed in a pre-close trading statement that its total revenue had increased 19.4% to €4.12bn over the year to 30 September, with like-for-like sales up 6.5%.
Growth was driven by its PEPCO chain which saw revenues climb 29.2% to €2.17bn and like-for-likes increase by 9.8%. 364 net new PEPCO stores were opened during the year, including the first in Austria, Serbia and Spain, taking the total to 2,464.
Meanwhile, the Poundland/Dealz division delivered a 9.8% rise in revenues to €1.96bn. Amid the disruption caused by the pandemic, the unit’s like-for-like sales still rose 3.1% as it benefitted from a shift to multi-pricing and the introduction of new products, including an extensive frozen and chilled food offering. Alongside its store renewal programme, 60 net new stores were opened, taking the division’s total to 1,040.
The group now expects full-year EBITDA to be within a range of €640m to €655m. This is at the upper end of analysts’ expectations and represents around 45% growth at the mid-point on the Covid-19 impacted prior year.
Andy Bond, Chief Executive of Pepco Group, stated that the business had made good progress against its strategic plans during the year.
He said: “Despite the operational challenges from Covid disruption, we continued to open new stores across all three of our brands … We are also pleased by the results of our store renewal programme in driving our like-for-like performance and enhancing the customer experience.”
However, Bond highlighted that pressure on global supply chains had increased with reduced raw material availability leading to commodity inflation, further compounded by constrained container capacity which had “significantly increased” shipping costs in the final quarter.
“Through a combination of actions taken in our operating model and our unique Far East direct sourcing operation, PGS, which has strong direct supplier and factory relationships, we have quickly taken operational action to mitigate these impacts,” he said.
Bond revealed that the group planned to invest in its price proposition to maintain its competitive advantage in a tough economic climate for consumers. “We have developed clear plans to reduce our operating cost base through leveraging our increased scale and capability to maintain the continued delivery of our profit growth,” he said.
