Pepco posts 2.3 percent drop in Q1 like-for-like sales

Pepco Group reported first quarter revenues of 1.9 billion euros with constant currency revenue growth of 11 percent versus last year. However, group like-for-like (LFL) revenues declined 2.3 percent.

The company said, Pepco brand LFL revenue fell 3.7 percent, Poundland LFL grew 0.9 percent, with a strong peak Christmas performance driven by demand for FMCG, offset by a weaker performance in clothing, while Dealz LFL declined by 4.6 percent.

The company saw a 200 basis point recovery in gross margin, driven by Pepco.

Commenting on the results, Andy Bond, executive chair of Pepco Group, said in a statement: “Whilst the Pepco brand saw LFL revenues down across the quarter against a tough comparative period last year, it was encouraging to see the LFL trend improve over the three months in its core CEE markets. Poundland continued to perform robustly in Q1, boosted by strong sales of FMCG.”

As far as the outlook is concerned, with trading conditions continuing to be challenging across Europe, the company remains cautiously optimistic for 2024.

“I am pleased that we achieved a 200 basis point year-on-year improvement in gross margin during Q1, and this positive trajectory is expected to continue over FY24 - notwithstanding the potential impact of external factors beyond our control, such as industry-wide supply chain disruption,” Bond added.

The group opened over 200 net new stores in the first quarter, including a one-off benefit from 54 Wilko conversions in the UK. The company expects to open at least 400 net new stores in FY24, excluding the one-off Wilko conversions in the UK.

Pepco brand opened 127 new stores during the first quarter driven by CEE with over 70 percent of openings within the region, including 39 net new store openings in Poland. Poundland opened doors to 77 gross new stores, largely reflecting 54 Wilko conversions during the period. Dealz Poland opened 26 new stores in the period, and now operates 309 stores in total across Poland.