Pepco's expansion and pricing ensures continued revenue success in Q3

By

Nigel TAYLOR

Published
Jul 14, 2022

​Its key pillars "bigger, better, simpler and cheaper" appear to be winners for pan-European variety budget retailer Pepco Group with group sales rising "strongly" in its third quarter.

The group, which operates the Poundland banner in the UK, plus Pepco and Dealz stores in Europe, and is the maker/retailer of the Pep&Co fashion line, reported “strong” group revenues for the April to June period. They jumped to €1.21 billion in the quarter bringing its year-to-date revenues to €3.58 billion, up 17.4% on a constant currency basis.

Revenue growth for Q3 alone came in 17.1% ahead, with its core Pepco retail brand delivering 28.5% growth and Poundland up a more modest 3.8%. On a like-for-like basis growth was 4.9%, up 7.3% at Pepco and 2% at Poundland.

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Compared with the pre-Covid period of Q3 FY19, average store sales at Pepco were ahead 9.2% over the quarter. Similarly, looking at the three-year comparison for the Poundland Group shows average store sales for Q3 FY22 up 5.6%.

Of course, with expansion “the main key pillar of value creation” across all its brands, it’s no surprise there were 350 new stores added to its store portfolio so far this year. It’s also on track to deliver an upgraded target of 450 net new stores in fiscal 2022.

Pepco saw 115 new stores opened in Q3, including 40 in the Western European markets of Austria, Italy, Spain and Germany.

It also completed 82 store renewals in Q3, making a total of 668 year-to-date, “upgrading stores layout and environment, driving LFL sales growth and enhanced customer perception”. 

In March, the group had launched a trial in Spain offering its full range of Pepco clothing, Pepco GM and FMCG across selected stores. 

How did that go during Q3? "Exceptionally well", it said, adding that, "we have been encouraged by the initial response of customers with a significant increase in customer satisfaction”. 

Such has been the success that it will now be converting existing Dealz stores in Spain to Pepco stores and adding the FMCG offering where space allows.

And with keen pricing its second pillar, the group also said it's “committed to investing in its price proposition and maintaining its market-leading variety discount offering”, aided by reducing the cost of operations.

Pointedly, Pepco said it was “encouraged that the discount market across Europe is now much larger than at the time of the financial crisis in 2007-08 which means that a much larger customer base is more familiar with and more frequently shops across this channel”.

Trevor Masters, CEO of the group, said: “We are excited about our expansion plans in Spain as they are the first step on the journey to make the best of the group’s offering available to more customers than ever before. It means we can leverage the benefits of our broader offering across the group, making us even more efficient and effective.”

He added: “We remain confident in the strength of our customer proposition, market positioning and in our ability to drive long-term value creation.”