Pepco Group celebrates record revenue despite challenges from Poundland’s performance.
- Poundland faces setbacks, recording only a 0.3% revenue growth with significant impairment.
- A focus on transitioning to Pepco-sourced products led to a 21.5% drop in EBITDA for Poundland.
- Group-wide, however, Pepco’s expansion in Europe boosts overall financial performance.
- With a promising outlook, Pepco Group declares its first-ever dividend, indicating confidence.
Pepco Group has announced a remarkable achievement in its financial performance, reporting record revenue for the fiscal year ending 30 September 2024, despite facing challenges within its Poundland subsidiary. The group’s overall performance was overshadowed by Poundland’s struggles, including a substantial £675 million impairment charge.
Poundland showed meagre revenue growth of 0.3% year-on-year, with like-for-like sales declining by 3.6%. The UK discounter faced an EBITDA drop of 21.5% to £134 million due to increased competition and challenges associated with shifting to Pepco-sourced products. This strategy, intended to fortify the product range, led to transitional difficulties impacting sales and profitability.
Consequently, the group reported a net loss of (£576 million) for the year. Despite this, the group delivered record underlying EBITDA of £824 million, up by 25.2% year-on-year, with total revenue increasing by 10.2%. The company recognised the difficulties at Poundland, citing the impairment charge as arising from a “significant decline in performance.”
Stephan Borchert, Group CEO, pointed to the trials faced by Poundland, emphasizing the decline in clothing and general merchandise sales. The company is actively focusing on realigning Poundland with its strengths and examining its position within the competitive landscape to ensure future success.
In contrast, the Pepco division demonstrated substantial progress, contributing significantly to the group’s overall growth. Pepco’s revenue increased by 14.2%, and its footprint expanded further into Central and Eastern Europe with the opening of 331 new stores. This expansion underscores Pepco’s role as the core engine for the group’s future strategic and financial growth.
Pepco Group’s confidence in its prospects is bolstered by its decision to declare its first-ever dividend, signalling a strong outlook and potential for future cash returns, including share buybacks. While the group experienced broad revenue and earnings growth, like-for-like revenue across the group saw a downturn of 3.2%, reflecting wider economic pressures and specific market challenges.
Andy Bond, the non-executive chair, highlighted the group’s successes in rebuilding profitability in the Central and Eastern European market and achieving stronger cash generation. These efforts demonstrate the group’s commitment to targeted growth and careful investment. Borchert expressed optimism about Pepco’s potential, viewing it as pivotal to the group’s future, especially within its Central and Eastern European base.
Despite significant challenges within Poundland, Pepco Group remains optimistic, driven by robust growth and successful expansion in its Pepco division.
