Pepco Group has encountered significant financial challenges.
- The company has recorded a £675m impairment charge linked to Poundland.
- Like-for-like sales for Poundland dropped by 3.6% over the past year.
- Group CEO Stephan Borchert outlines efforts to recover Poundland’s performance.
- Despite Poundland’s difficulties, Pepco marked record revenue growth.
Pepco Group has reported a major financial setback, announcing a £675m impairment charge related to its UK discount chain, Poundland. This development is primarily tied to the acquisition’s goodwill value amid a challenging period for Poundland, which saw a 3.6% decrease in like-for-like sales for the fiscal year ending 30 September 2024.
The substantial impairment hit contributed to a net loss of £548m for the period. Chief Executive Officer, Stephan Borchert, acknowledged the challenges, attributing them to intensified competition and increased costs. Additional difficulties arose from a strategic shift to Pepco-sourced clothing and merchandise ranges earlier in the year.
In response to these challenges, Borchert stressed the importance of realigning Poundland’s operations to focus on its foundational strengths. He emphasised the need to evaluate its competitive position as a Fast-Moving Consumer Goods (FMCG) leader, aiming to present future updates on the retailer throughout the first half of 2025.
Despite the troubles faced by Poundland, Pepco Group overall reported record revenues of £6.2bn, marking a 10.2% increase year-on-year. Contributing to this growth were the successes in other segments, such as Dealz, and seamless expansion across Central and Eastern Europe with the addition of 331 new stores during the year.
Non-executive Chair Andy Bond indicated that the company’s strategic objectives for 2024, which included profitability improvements within Central and Eastern Europe, had been met. There is acknowledgment, however, that further efforts are required. Executive remarks highlighted Pepco as a vital element for strategic and financial growth, particularly in its core European markets.
Pepco Group navigates challenging retail terrain, with Poundland’s future hinging on strategic realignment amidst broader growth.
