Pepco’s performance improves in the third quarter

STEINHOFF International subsidiary, the Pepco Group, yesterday said trading performance in the third quarter to the end of June improved, compared to the same quarter last year, after the easing of trading restrictions.

However, despite the improvement the group still lost 7.5 percent of its trading weeks in the quarter, due to trading restrictions as a result of Covid19, but was much better than the 18.4 percent lost in the same quarter last year.

Pepco Group chief executive Andy Bond said they made good strategic progress in the third quarter, with all three of their brands delivering a resilient trading performance as consumers continued to come back to Pepco, Poundland and Dealz, following the gradual easing of Covid restrictions.

“We continued to invest in the future growth of our business opening 117 new stores in the three-month period and 342 in the year to date, as well as signing an agreement to take up to 29 stores in Austria. The group also upgraded 260 Pepco stores and, following the acquisition of Fultons Foods in autumn 2020, introduced a full chilled and frozen offer to 42 Poundland stores,” Bond said.

The fast-growing pan-European variety discount retailer said customer restrictions were eased over the quarter, with the quarter beginning with 1 075 or 33 percent of stores closed across 11 territories progressing to a full reopening by June 27, with associated consumer rebound.

The group reported a revenue of €1.04 billion (R18bn) and a closing cash of €448 million at the end of the quarter, down from last year’s €461m.

“The year-on-year lower cash position is driven by excess cash utilised to pay down debt as part of the initial public offering driven refinancing in May 2021,” the group said.

Pepco Group set a price of €8.80 a share for its listing on the Warsaw Stock Exchange, valuing the company at €5bn in May.

Its net debt was reduced to €169m, down from €295m, and the group said this reflects continued underlying business growth and actions developed during 2020 with key suppliers that enhance the group’s working capital cycle.

The Pepco brand expanded its store portfolio by 224 stores in the year-todate which represented 15.5 percent year-on-year store growth.

“During the quarter 95 new stores were opened across all of its 14 existing territories including its first stores in Spain,” the group said.

Pepco, as a non-essential retailer, was the most impacted by Covid-19 but still managed like-for-like growth revenue growth of 9.6 percent.

In Poundland, the group reported a 21.1 percent like-for-like revenue growth.

However, Bond said global supply chains continue to be impacted by both reduced raw material availability and input cost pressure compounded by constrained container capacity, which has the potential to introduce cost inflation starting during the autumn/winter 2021 season.

Looking ahead, he said: “While the consumer backdrop is likely to remain volatile and challenging for some time, we remain confident in the strength of our customer proposition and the long-term growth potential for our business.”