Steinhoff International’s European discount retailer Pepco said yesterday that its revenue surged, boosted by the acceleration of its profitable store-expansion programme.
In its trading statement for the year to end September, Pepco Group, owner of the PEPCO and Dealz brands in Europe and Poundland in the UK, said its revenue increased by more than 17% to €4.8 billion (R97bn), on a constant currency basis. While Poundland saw a 5% increase in sales, PEPCO revenue rose by almost 29%.
According to the group, which Steinhoff owns 79%, it delivered a record number of 516 net new stores under its accelerated store expansion programme – the group’s single biggest driver of value creation – in the 2022 financial year, ahead of its upgraded target of 450 new stores.
“In PEPCO 446 new stores were opened, ahead of our 400 guidance, including 163 new stores in the strategically important western European markets of Italy, Spain, Germany and Austria.
“Within the Poundland group, 70 new stores were opened almost exclusively in the Dealz Poland business, excluding the closure of 59 Fulton’s stores," it said
The group said after an encouraging performance in new and existing markets, it would further accelerate its store expansion programme and is now targeting opening at least 550 net new stores in the 2023 financial year alongside entry into the new territories of Greece and Portugal for the PEPCO brand.
Pepco said the demand for its products remained strong even against the backdrop of significant uncertainty in the macroeconomic environment, exacerbated by the impact of geopolitical events.
Pepco Group CEO Trevor Masters said: “These are very challenging times for families across Europe, and we remain absolutely committed to helping customers on a budget by offering great range, value, and convenience – and we are confident this will enable us to expand our customer base going forward.”
He said Pepco’s progress to date gives the company confidence that this continued expansion of its estate will enable it to achieve greater scale economies across the group and drive further efficiency savings.
“As a result of our continued focus on driving progress under our key strategic pillars, we remain confident of our ability to continue to grow our earnings before interest, taxes, depreciation, and amortisation (Ebitda), in line with our historic run-rate, in the absence of any further deterioration of macro-economic trading conditions,” he said.
Looking forward, the group said given the profitable returns it continued to deliver from its stores, it was committed to accelerating its store roll-out programme which, combined with its increased focus in western Europe and its ongoing refit programme, meant that its annual capex would rise from historic levels to between €350m and €400m.
“This investment will be funded by continued management actions driving recurring operational cash-flow savings. While trading conditions continue to be challenging, we are confident in our continued progress and believe that the market volatility offers a significant opportunity to grow our market share and brand presence across Europe,” it said.
Meanwhile, Steinhoff said it was continuing to explore strategic options for the American-based Mattress Firm. Steinhoff owns 50% of the company, the largest speciality mattress retailer in the US.
Last year, Steinhoff said that it was considering listing Mattress Firm. Earlier this year, Steinhoff said the company was IPO-ready.
On Wednesday, the group said the evaluation process remains ongoing, and no definitive decision has been taken with respect to any specific course of action.
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