Discounter Pepco ramps up store openings as shoppers seek value

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  • Open at least 550 stores in 2022-23
  • According to consumers, more than ever looking for value
  • Forecasts a 2021-2022 base profit of 735-750 million euros
  • Shares up 2.1%

LONDON, Oct 12 (Reuters) – The Pepco Group (PCOP.WA), owner of European discount retailer brands PEPCO, Poundland and Dealz, said it would step up its store opening program as demand for its products remained strong in a context of economic uncertainty.

The group, which listed on the Warsaw Stock Exchange last year, said it aims to open at least 550 net stores in its 2022-23 financial year, including introducing the PEPCO brand in Greece and Portugal.

It opened a net number of 516 stores in 2021-22 and is currently trading from 3,961.

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“We are accelerating our strategy in order to capitalize on the opportunities available to us in these volatile market conditions,” CEO Trevor Masters said.

The group’s long-term ambition is to reach 20,000 stores.

“It’s a very large number, but it’s a number that we absolutely believe in only in the fullness of time that we can deliver,” acting chief financial officer Mat Ankers told Reuters.

The acceleration means that annual capital expenditure will reach up to 400 million euros ($389 million), against market expectations of around 225 million euros.

For the year through September 30, Pepco forecasts underlying core profit (EBITDA) at constant currency of 735-750 million euros ($714-728 million), in line with expectations.

Group sales increased by 17.4% at constant exchange rates to 4.82 billion euros, driven by store openings.

Like-for-like sales increased 5.2% and 15.5% in September, providing a strong exit rate for the new fiscal year. Pepco shares were up 2.1% at 0818 GMT.

He said demand remains strong across his product lines despite political and economic uncertainty.

Inflation in Europe remains at historic highs, but Pepco noted that in its main markets of Poland, Hungary and Romania, clothing and footwear inflation was only about a third of the rate of inflation. overall.

Clothing and food remain resilient categories in the retail sector in Poland and wider Central and Eastern Europe, the company said, adding that the outlook in Britain remained “challenging” amid pressure on consumers’ disposable incomes.

“Consumers are looking for value more than ever,” Ankers said.

“We are absorbing and mitigating costs to protect prices for consumers,” he said, noting that the company had held pricing this year and would do so next year, despite declining profit margins.

($1 = 1.0298 euros)

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Reporting by James Davey; Editing by Shri Navaratnam and Mark Potter

Our standards: The Thomson Reuters Trust Principles.


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