Discounter Pepco Group, which reported a 2.5% fall in first-half same-store sales, has said the trading environment across Europe remains challenging.
The Warsaw-listed owner of the Pepco, Poundland and Dealz brands, which issued two profit warnings last September, said group revenue was €3.2 billion in the six months to March 31, a rise of 11% on a constant currency basis, which reflected the opening of 289 net new stores.
The group, whose shares have lost more than half of their value over the last year, also announced the appointment of Stephan Borchert, the former chief executive of optical retailer GrandVision, as CEO effective from July 1.
It said Andy Bond will remain in his role as executive chair until Oct. 1, when he will revert to the role of non-executive chair.
‘Improved Performance’
“While the trading environment remains challenging, we are encouraged by signs of an improved performance in some of our core Pepco Central and Eastern Europe markets – a key geographical region for the Group – during the second quarter,” Bond said.
The group was also encouraged by year-on-year improvements in gross margins, which it said were being driven by easing input costs, including commodity and freight, more favourable currency rates, and better buying margins.
The group noted disruption to Red Sea shipping continued to lead to some surcharges in freight rates and delays to container lead times.
However, it said it was ‘managing’ product availability and did not expect this to significantly impact gross margins in the second half.
‘Overall, the group remains confident in delivering profitable growth in this financial year,’ it said.
Store Openings
In October, the group said it would slow down its store opening programme to focus on rebuilding profitability and in February it said it would exit the Austrian market.
The group still plans to open at least 400 net new stores in 2023/24.
Also in February, Pepco said its Hungarian business had lost about €15.5 million in a phishing attack.
