Pepco strong in Christmas period, Pep&Co boosts Poundland unit

By

Sandra Halliday

Published
Feb 5, 2020

The final quarter of last year was a good one for Pepco in Europe and reasonably good for its UK Poundland chain, which saw sales rising in the important Christmas trading period, boosted by the Pep&Co clothing concessions.

At the Poundland operation in the UK and the equivalent European chain, Dealz, like-for-like sales rose 1.3%, the company said. And Poundland saw a record trading day on December 23 with nearly 1.6 million customers served on that day.

As mentioned, the Pep&Co presence in its shops was very important for its positive sales development, and the label now has a prominent position in its stores, often positioned right near the entrance, underscoring its appeal. The range is present in 301 UK and Republic of Ireland stores out of a total of 911 in the Poundland/Dealz line-up.

Poundland’s revenues were also helped by the company deviating from its standard £1 anchor price point and introducing extended product ranges at prices both above and below that level, especially in health and beauty and household, as well as the variety of prices for Pep&Co.

Pepco also owns its eponymous chain in Europe and sales here rose an even stronger 6.6% on a like-for-like basis and 24.6% on a total basis to €597 million during the period. That helped overall group like-for-like sales to rise 3.9% and total revenues to leap a healthy 13.3% to €1.1 billion.

Andy Bond, who’s group CEO, said that the company made “operational and strategic progress” in the quarter and he expressed confidence in its prospects for continued growth across Europe.

In fact, the business has been growing fast in mainland Europe and in the latest quarter benefited from increasing its store numbers with a 20% increase in doors year-on-year. It has opened 94 new locations in total and now has almost 1,900 Pepco stores.

And it doesn't appear to be slowing down on this front with another 300 expected for the full financial year, including its first Italian location in two months’ time that should expand to a total of 10 Italian stores by the end of 2020. 

But while the expansion programme is set to continue, there could be a significant change ahead for the company. A Sky News report this week said that Poundland’s ex-owner has linked up with two private equity firms and wants to buy Pepco with a possible offer of around £3.8 billion.

Advent International sold Poundland for £200 million in 2010 and is now working with Hellman & Friedman and Mid Europa Partners on the possible bid.

But Pepco is owned by under-pressure South African conglomerate Steinhoff, which is reportedly planning to float the unit on the stock market, with suggestions that it could be seeking a bid of £4 billion+ in order to change its mind and sell it privately.