Pepco: Poundland owner ‘cautiously optimistic’ despite ‘disappointing’ profits
The owner of Poundland, Pepco said it was cautiously optimistic for the year ahead, as it recorded a 17.1 per cent surge in revenues for the full year to €5.6bn – despite profit problems mounting.
Demand for budget goods has surged amid the cost of living crisis as shoppers seek out cheaper alternatives, according to its preliminary results.
However, Pepco said that since the start of the new financial year trading has been “mixed” – as the European brand was hit by unseasonable weather.
Its Poundland arm saw like-for-like sales slightly above the same period last year, as it was bolstered by demand for cheap packaged goods.
For the full year, the firm said underlying EBITDA was largely flat growing just 3.1 per cent to €753m (£645m).
It also said there had been a 33.7 per cent drop in underlying profit before tax, with its executive chair Andy Bond, “our overall performance was mixed with a disappointing profit outturn.
“We are acting decisively to address this, reaffirming our strategy to deliver more measured growth – doing less, to achieve more – with a greater focus on improving profitability and cash generation.”
But the company said it sees strong growth in the UK discount space in the year to come.
Pepco took control of 71 Wilko store leases in the UK when the rival store collapsed and has so far transformed over 60 sites into Poundland stores.
“The integration of Wilko stores into the Poundland brand provides the group with an exciting opportunity to accelerate the new store pipeline in the UK, with no additional central cost base increase,” Pepco said.
The firm said it is “cautiously optimistic” about the year ahead.
The board said: “While we expect the challenging trading conditions outlined above to continue in the near term, we are cautiously optimistic as we enter 2024. “
“More disciplined control on operating costs and line-of-sight on easing input costs, including commodity and freight, is aimed at rebuilding our margins back to pre-pandemic levels. “
“We are increasingly confident of the gross margin opportunity in FY24, evidenced by the 100 basis point improvement seen year-to-date versus the quarterly exit rate achieved at the end of FY23. “