Poundland hit by difficult sales environment with recovery a 'key priority'

Pepco Group has reported a challenging trading environment at Poundland during the first quarter ending 31 December 2024, largely driven by a weak clothing and general merchandise performance and tough market conditions. 

The company delivered revenues of £1.6 billion (€1.9 billion), down 1.1% on a like-for-like basis, with a positive performance at Pepco and Dealz offset by continued challenges at Poundland.

Poundland like-for-like revenues declined 7.3%. The value retailer also reported a net closure of 11 Poundland stores, primarily reflecting lease expirations on larger stores. It will not open any net new stores during the remaining quarters.

Looking ahead, Pepco Group said it expects to deliver profitable growth during the year, driven by further operational improvements and enhancement of its core customer proposition.

However, the company noted continued challenges for Poundland, as previously described, amid a more difficult sales environment and consumer backdrop in the UK, alongside margin pressure and an increasingly higher operating cost environment.

It is continuing a "comprehensive assessment" of Poundland to recover trading and get the business back to its core strengths, including a thorough assessment of all costs across the business, as well as evaluating its overall competitive positioning.

Stephan Borchert, CEO at Pepco Group, said: "The group delivered a mixed performance in its first quarter, with a strong performance from both the Pepco and Dealz brands, partially offset by Poundland’s ongoing challenges.

"Getting Poundland back on track is a key priority - we are undertaking a comprehensive assessment of the business and taking immediate measures on improving our cash performance and strengthening the customer proposition."

The trading update comes as Poundland invests more money than ever into new security measures to tackle retail crime after losing more than £40 million worth of stock last year.

The value retailer, which sells a large proportion of its products for £1 or less, said it had been a particular target of theft and abuse.