Poundland owner Pepco eyes profit surge as revenue passes milestone
Pepco, the owner of Poundland, has set its sights on posting profits of €900m (£766.51) for its current financial year after the group’s interim revenue passed a major milestone.
The group is forecasting an increase in its EBITDA for the 12 months to the end of September 2024 after posting a total of €753m in its most recent 12 months.
The update comes as the Poundland owner revealed its half-year revenue increased from €2.8bn to €3.1bn while its pre-tax profits rose from €119.6m to €144m.
The group owns the Pepco and Dealz brands in Europe and Poundland in the UK.
Poundland owner hails European success
Executive chairman Andy Bond said: “We are today reporting a solid group performance for the first half, including record revenues and a significant uplift in gross margin, reflecting good progress against strategic priorities set out last autumn.
“The standout performer was Pepco’s Central and Eastern European business, the key engine driver for the group.
“We have successfully rebuilt gross margin and store profitability in this region back towards pre-pandemic levels with further opportunities for improvement.
‘This achievement underscores Pepco’s continuing and compelling customer offer across apparel and general merchandise at market-leading prices.
“Despite a positive FMCG contribution, Poundland’s performance was behind expectations due to challenges in implementing the significant range change to Pepco products, which we are addressing. Dealz Poland continued to make progress.
“Across the group, we made significant strides in improving gross margin in H1, which increased by 310 basis points to 43.1 per cent.
“This improvement was driven by enhanced product purchasing, as well as a more normalised environment for commodity prices, foreign exchange and freight cost versus the prior year, notwithstanding some impact from the situation in the Red Sea.”
Pepco added that it opened 289 net new stores in the six months and said its robust performance” reflects successful delivery against its strategy and a “fantastic contribution from all colleagues across the group”.
Pepco eyes future growth
On the group’s future, Bond said: “Looking ahead, while consumer sentiment in some of our key markets remains challenging, we expect to deliver underlying EBITDA (IFRS16) for the full year in the region of €900m, compared with €753m in the previous year.
“We will also benefit from greater focus on disciplined capital investment, with an improvement in free cash flow generation expected in the full year.
“This financial strength positions us well to continue executing our growth strategy while maintaining a strong balance sheet.”