Poundland owner Pepco achieves record revenue despite 'disappointing' profits

Pepco Group has reported record revenue of £4.8 billion (€5.6 billion) for the year ending 30 September 2023, but has refocused its strategy after "disappointing" profits.

The group saw revenue lift 17.1% year-on-year on a constant currency basis, driven by growth at Pepco of 24.8% and Poundland of 8.4%.

For FY23, Pepco Group also shared the following results:

• Gross profit up 15.6% to £1.8 billion (€2.2 billion).
• Gross profit margin down to 40.1%.
• Underlying EBITDA (IFRS 16) up 3.1% to £646 million (€753 million).
• Underlying EBITDA (pre-IFRS 16) down 10% to £340 million (€396 million).
• Net debt up 49.4% to £353 million (€411 million).

The total number of stores at the end of FY23 reached 4,629, with 668 new store openings during the year.

Looking ahead, the group expects to open at least 400 new stores across all formats in FY24, with the Pepco brand accounting for the highest number.

It has also refocused its strategy to "drive core profitability through a more disciplined approach to growth and investment".

Andy Bond, Executive Chair of Pepco Group, said: "Despite a challenging market backdrop, we delivered another year of strategic progress and record sales of €5,649m, against a strong prior year comparative.

"That said, our overall performance was mixed with a disappointing profit outturn. We are acting decisively to address this, reaffirming our strategy to deliver more measured growth – doing less, to achieve more – with a greater focus on improving profitability and cash generation.

"This includes a more targeted approach to new store openings in existing markets, and our renewed focus on transitioning into one single business through a unified customer offer and sourcing strategy, helping us drive enhanced cost and operational efficiency.

"Looking ahead to 2024, while we expect industry-wide short-term sales challenges to continue, we are cautiously encouraged by recent third-party data pointing to an expected easing of certain pressures on household budgets, particularly in Central and Eastern Europe."