Poundland owner Pepco annual revenue rise despite "challenging" market

Pepco Group has reported a 17.7% increase in annual revenue to £4.8 billion (€5.6 billion) after downgrading its expectations last month.

The group saw revenue lift 12.5% year-on-year on a constant currency basis to £1.2 billion (€1.4 billion) in Q4, with Pepco up 12.6% and Poundland up 12.4%.

However, like-for-like revenue remained flat in the fourth quarter. This reflects "challenging trading, as previously reported, with like-for-like revenue turning negative in August and worsening in September".

Andy Bond, Executive Chair of Pepco Group, said: "Group performance over the past year has been mixed against a challenging market backdrop.

"As announced on 12 September, the trading environment deteriorated significantly in the last quarter across Pepco’s markets, notably in Central and Eastern Europe, with weaker sales, a lower than forecast gross margin and higher costs, resulting in a reduced level of profitability in our core markets, which we are addressing."

The group's financial performance was helped by a record 343 new store openings during the fourth quarter, with 668 opened in total during the year.

Last month, Poundland agreed to take over up to 71 Wilko store leases in the UK. It has already reopened 20 Wilko stores as a Poundland stores, following the high street chain's fall into administration in August.

Pepco Group expects to deliver underlying FY23 EBITDA of £647 million (€750 million), due to "weaker than expected fourth quarter sales and the impact of higher costs, partly reflecting the recent investment in its new store openings".