Pepco Group’s financial year saw record revenues, yet struggles at Poundland cast a shadow.
- Poundland faced a £675 million impairment charge, affecting overall performance.
- The discounter’s revenue growth was minimal, with a notable decline in like-for-like sales.
- Challenges included increased competition and transitions in product sourcing.
- Despite Poundland’s issues, Pepco’s growth in Central and Eastern Europe was strong.
Pepco Group reported record revenues and EBITDA for the year ending 30 September 2024. However, Poundland’s performance issues, including a substantial £675 million impairment charge, significantly overshadowed the group’s achievements. The charge was primarily due to a goodwill adjustment, reflecting the decline in Poundland’s profitability outlook amidst competitive and cost pressures.
Revenue growth for Poundland was modest at 0.3%, with a 3.6% fall in like-for-like sales. The UK discounter faced a 21.5% drop in EBITDA to £134 million, driven by increased competition and difficulties in integrating Pepco-sourced products. These challenges contributed to a group-wide net loss of £576 million, despite a 25.2% year-on-year increase in underlying EBITDA to £824 million and a total revenue growth of 10.2%.
Acknowledging Poundland’s challenges, the group’s CEO, Stephan Borchert, stated, “Recent performance has been very challenging, impacted by declines in clothing and general merchandise following the transition to Pepco-sourced product ranges.” Borchert emphasised swift action to improve Poundland’s performance, focusing on its core strengths and competitive position as an FMCG-led format.
Meanwhile, the Pepco division demonstrated strong performance, contributing significantly to the group’s growth. Pepco’s revenue increased by 14.2%, and its expansion continued with the addition of 331 new stores across Central and Eastern Europe during the year. This growth underscored Pepco’s importance as a key driver of future strategic and financial progress.
Non-executive chair Andy Bond noted the group’s achievements in overcoming challenges, stating, “We have delivered on our objectives, but there is more to achieve.” The company declared its first-ever dividend, reflecting confidence in its outlook and potential future cash returns, including share buybacks.
Despite the setbacks at Poundland, Pepco Group remains optimistic about its growth prospects, supported by strong performances in other areas.
