Coronavirus wipes out strong start for Poundland owner
POUNDLAND OWNER Pepco registered a sharp drop in profit when the coronavirus outbreak hit, wiping out what could have been a strong start to the financial year.
Almost all of the company’s 2,844 stores have now reopened, with only 1 per cent remaining closed, but the effect of Covid-19 had already taken a significant chunk out of the business.
In the first six months of the financial year, pre-tax profit dropped by 16 per cent to £81m.
However, if the cut-off point had only been a month earlier, Pepco’s results could have been very different.
In the five months to February, before the pandemic seriously affected its main markets, profits rose nearly 22 per cent to £105m.
Chief executive Andy Bond said: “It is pleasing to report continued strong operational, strategic and financial progress made by all parts of the Pepco Group before the impact of Covid.”
Mr Bond said that the crisis has “fundamentally changed what we sell in our shops”.
He said: “People are buying much more stuff for the home during lockdown, so we are selling a lot more products to help with home-schooling, as well as DIY and gardening items.
“But we’ve reduced the amount of drinks we sell, for example, as people aren’t coming for a small bottle of drink in the same way as they did before.”
He added that the crisis could benefit the firm, as people in financial difficulty looked to discount retailers to do their shopping.
“Looking forward, the consumer outlook remains uncertain and our plans reflect our expectation of a ‘new normal’ trading environment once we all emerge from the Covid virus,” he said.
“However, it is likely that consumer demand for discount retailing will increase in a period of prolonged economic uncertainty, and we are extremely well placed to take advantage of this trend.
“We remain confident that we have the vision, the strategy and the business model to continue to deliver attractive long-term sales and profit growth.”
Although Poundland itself was classed as an essential store in the UK and allowed to keep trading, the company temporarily shut 130 of its more than 800 sites.
Sales were down around 40 per cent at stores that did stay open.
Just 856 of the Pepco-branded stores, which are big in eastern Europe, were open – around 44 per cent of the total – and sales dropped to around 15 per cent of their usual levels for a time.