STEINHOFF’S subsidiary, Pepco, the fast-growing pan-European variety discount retailer, yesterday forecast revenue growth up 19.4 percent for the year to September as it expanded its store portfolio by 17.3 percent and as it opened its first stores in Austria, Serbia and Spain.
Pepco, the owner of the Pepco and Dealz brands in Europe and Poundland in the UK and which listed on the Warsaw stock market in May with a €5bn valuation, said revenue was at €4.1 billion (R70.2bn), led by Pepco with 29.2 percent growth. Like-for-like sales were up 6.5 percent.
Underlying earnings before interest, taxes, depreciation, and amortisation (Ebitda), was anticipated to be within a range of €640 million to €655m at the upper-end of analyst expectations and representing 45 percent growth at the mid-point on the Covid impacted prior year.
Amid Covid, Pepco said pressure on global supply chains had increased with reduced raw material availability leading to commodity inflation, further compounded by constrained container capacity, which significantly increased shipping costs from the final quarter.
However, Pepco said through a combination of actions taken in its operating model and its Far East direct sourcing operation, PGS, which had strong direct supplier and factory relationships, it had taken operational action to mitigate these impacts.
Pepco continued to be strongly cash generative after capital expenditure of €190m (R3.2bn). It had closing cash of €513m, from €400m the prior year and net debt of €102m from €328m in 2020 as management took action to reduce stock and optimise working capital across the year.
Chief executive Andy Bond said Pepco had developed clear plans to reduce its operating cost base through leveraging its increased scale and capability to maintain the continued delivery of profit growth.
The fourth quarter had seen a return to all stores trading, reflecting a further easing of disruption seen in the third quarter as a consequence of the Covid-19 pandemic.
Pepco had expanded its store portfolio in the full year by 364 stores, which included its first stores in Austria, Serbia and Spain, while it had also continued to upsize or relocate stores, numbering 60 in the full year and began the first steps in updating branding in stores to reflect a new design that would represent Pepco in its next phase of growth.
The store renewal programme continued in both Pepco and Poundland updating nearly 1 000 stores in the year.
Bond said: “We delivered another strong trading performance and made good progress against our strategic plans during the year. Despite the operational challenges from Covid disruption, we continued to open new stores across all three of our brands, opening 141 in the final quarter. This brought the total to 483 net new stores for the year – a record number of annual openings – including the first Pepco stores in Austria, Serbia and Spain. ”
Looking ahead, Bond said: “While the backdrop against which we operate will remain challenging for some time, we remain confident in the significant growth opportunity we have, our plans to achieve them, and meeting future market expectations.”
Pepco expects its annual results to be published on December14.
BUSINESS REPORT ONLINE