Poundland owner Pepco sales dip amid ongoing freight delays and extra costs from Red Sea disruption

The parent firm of Poundland has said it is continuing to witness extra freight charges and delays due to disruption in the Middle East.

However, Pepco Group, which runs the 864-strong discounter in the UK, said it is managing product availability and does not expect any issues to have an impact on profits.

The retailer is among firms to have been affected by ships being re-routed away from the Red Sea and around the Cape of Good Hope following attacks by the rebel Houthi group, which has been locked in a decade-long civil war in Yemen.

It came as Pepco revealed a dip in like-for-like sales for the past quarter and the appointment of a new boss.

Pepco said it has appointed Stephan Borchert to become its next Chief Executive Officer from 1 July 2024.

Borchert was most recently the boss of Vision Express owner GrandVision until 2022, and previously president of Sephora’s European business.

The new boss, who will be based in London, said: "I’m honoured to be the next chief executive of Pepco Group – which has the opportunity to become Europe’s leading variety discount retailer.

"Pepco Group is a powerhouse retail business with a strong reputation for delivering incredible range, value and convenience for customers."

On Thursday, Pepco reported that like-for-like revenues dipped by 2.9% over the three-months to 31 March 2024.

However, total revenues were up 11.7% on a constant currency basis to £1.16 billion (€1.35 billion), after being boosted by store openings.

Poundland reported a 2.8% drop in like-for-like sales, with overall revenues up 4.5% to £391 million (€458 million).

The company added that Poundland was impacted by a change in its general merchandise and clothing ranges to use Pepco products over the past half-year, but stressed that this transition is "largely behind us".

Andy Bond, Executive Chairman of Pepco Group, said: "While the trading environment remains challenging, we are encouraged by signs of an improved performance in some of our core Pepco Central and Eastern Europe markets – a key geographical region for the group – during the second quarter.

"We expect a continued upward trajectory in like-for-like sales at Pepco in H2."