Yahoo Finance Discounter Pepco steps up store openings as shoppers seek value
By James Davey
LONDON (Reuters) -Pepco Group, owner of European discount retailer brands PEPCO, Poundland and Dealz, said it would accelerate its store opening programme, with demand for its products remaining strong amid economic uncertainty.
The group, which listed on the Warsaw stock market last year, said it was aiming to open at least a net 550 stores in its 2022-23 financial year, including taking the PEPCO brand into Greece and Portugal.
It opened a net 516 stores in 2021-22 and currently trades from 3,961.
"We are accelerating our strategy in order to capitalise on the opportunities available to us in these volatile market conditions," said CEO Trevor Masters.
The group has a long term ambition to reach 20,000 stores.
"That's a very large number but it's one that we absolutely believe in that in the fullness of time we can deliver on," acting finance chief Mat Ankers told Reuters.
The acceleration means annual capital expenditure will rise to up to 400 million euros ($389 million), versus market expectations of about 225 million euros.
For the year to Sept. 30, Pepco forecast underlying core earnings (EBITDA) on a constant currency basis of 735-750 million euros ($714-$728 million), in line with expectations.
Group revenue rose 17.4% at constant currencies to 4.82 billion euros, driven by the store openings.
Like-for-like sales rose 5.2% and were up 15.5% in September, providing a strong exit rate into the new financial year. Pepco shares were up 2.1% at 0818 GMT.
It said demand remains strong across its product ranges despite political and economic uncertainty.
Inflation across Europe remains at historic highs, but Pepco noted that in its core markets of Poland, Hungary and Romania inflation in clothing and footwear was running at only around a third of the headline inflation rate.
Both clothing and food remain resilient categories in the Polish and wider Central and Eastern Europe retail sector, the company said, adding the outlook in Britain remained "challenging" amid pressures on consumers' disposable incomes.
"Consumers are seeking value now more than ever," said Ankers.
"We are absorbing and mitigating costs to protect prices for consumers," he said, noting the firm had maintained prices this year and would do so next year, despite a hit to profit margins.
($1 = 1.0298 euros)
(Reporting by James Davey; Editing by Shri Navaratnam and Mark Potter)
