Pepco delivers resilient results as it expands its store footprint
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Pepco Group, a Steinhoff subsidiary and the owner of the Pepco and Dealz brands in mainland Europe and Poundland in the UK, posted a 12 percent growth in its quarterly revenue as it rolled out a record number of stores, cut costs and upped the anti to attract customers.
Pepco said yesterday that the growth was led by the Pepco banner that saw a 20 percent revenue increase.
Listed on the Warsaw stock exchange last May, Pepco group said the first quarter was its strongest ever quarter for store openings as it opened 161 new stores, of those, 146 were Pepco.
"These include 55 in the strategically important Western European markets of Italy, Austria, and Spain, which continue to trade ahead of expectations," the company said.
The group said it saw resilient underlying constant currency like-for-like (LFL) sales growth in the quarter, which rose 0.7 percent.
Poundland's LFL rose1.5 percent, as the firm continued to make progress across all aspects of its offer development programme, including range improvements in general merchandise and clothing, further expansion of multi-price penetration to 41.5 percent and the introduction of its new chilled and frozen offer to a further 52 stores.
Chief executive Andy Bond said while there were supply chain and demand challenges presented by the Coronavirus pandemic, consumer proposition had helped deliver buoyant results, despite the supply chain and demand challenges presented by Covid-19.
Bond said the strength of its consumer proposition of all three of its brands ensured that the group delivered a resilient trading performance.
The group also said it had seen significant delivery on operating cost initiatives, which both reduced its costs and delivered a more flexible, revenue-linked cost base.
Pepco’s markdown reduced by 0.8 percentage points to a historic low of 0.4 percent to sales, reflecting the initial impact of new improved processes within the supply chain, supported by new enhanced tools.
The reduced markdown and flow of goods also served to reduce absolute store labour costs while preserving levels of customer service, the group said.
Poundland had also successfully renegotiated 30 store leases, reducing passing rent by an average of 22 percent.
Closing net debt on an IFRS16 basis was €1.248 million (R22m), up from €1.174m in the corresponding period in 2021, which Pepco said reflected strong cash Ebitda (earnings before interest, taxes, depreciation, and amortization) and working capital efficiency offsetting increased lease liabilities from a record quarter of store expansion.
Closing net debt excluding leases of €115m from €187m in 2021 reflected strong cash generation while continuing to invest significantly in strategic growth initiatives, the retailer said.
Looking ahead, Bond said, “I will leave at the end of March confident that we have a clear growth plan and strong capability to deliver our long term-term profit growth aspirations, both this year and well into the future, through the excellent management teams led by Trevor and Nick.”
Last week Bond announced his retirement due to health reasons.
Trevor Masters, the chief operating officer of the Pepco, will assume the role of interim chief executive from March 31 and will be supported by management, including Nick Wharton, who has returned to business full-time as chief financial Officer.
Bond will be an advisor to the board of directors until the end of the fiscal year.
The infamous Steinhoff holds a 79 percent share in Pepco, which contributes about 45 percent to group revenue.
Steinhoff holds 79 percent of Pepco, which contributes about 45 percent to group revenue. Steinhoff had raised approximately €1 billion (R17bn) through Pepco’s listing in 2021.
This week Steinhoff announced that it planned to list its American-based subsidiary Mattress Firm on the New York Stock Exchange.
The retailer said it had applied to the US Securities and Exchange Commission for an initial public offering as part of a possible listing on the bourse. The company said the number of shares to be offered and the price range for the offering have not been determined as yet.