Pepco enjoys bumper quarter as Covid-19 restrictions ease in Europe
Steinhoff subsidiary has been expanding its stores and frozen-food offering
Steinhoff’s subsidiary — the fast-growing pan-European variety discount retailer — Pepco Group, owner of the Pepco and Dealz brands in mainland Europe and Poundland in the UK, said its business soared in the third quarter of its financial year to end-June 2021, as Covid-19 lockdown restrictions in place in Europe eased.
“We made good strategic progress in the third quarter, with all three of our brands delivering a resilient trading performance as consumers continued to come back to Pepco, Poundland and Dealz, following the gradual easing of Covid restrictions,” said Pepco CEO Andy Bond.
The group opened 117 new stores in the three-month period and 342 in the year to date, and also signed an agreement to take up to 29 stores in Austria, he said.
Pepco also upgraded 260 stores and, after the acquisition of Fultons Foods in autumn 2020, introduced a “full chilled and frozen offer” to 42 Poundland stores.
“Global supply chains continue to be impacted by both reduced raw material availability and input cost pressure compounded by constrained container capacity, which has the potential to introduce cost inflation starting during the autumn winter 2021 season,” Bond said.
The group had managed to source goods from the Far East through its direct sourcing operation PGS, he said.
“This allows us to continuously monitor and quickly take operational action to mitigate potential impacts, and we remain fully committed to being the lowest-price operator in all of our markets.
“While the consumer backdrop is likely to remain volatile and challenging for some time, we remain confident in the strength of our customer proposition and the long-term growth potential for our business,” Bond said.
Pepco, which is listed on the Warsaw stock exchange, benefited from diversifying its business across growing European markets. Vaccination rollouts against Covid-19 also helped the group.
The quarter began with 1,075, or 33%, stores closed across 11 territories progressing to a full reopening by June 27. This led to a rebound in sales.
The comparative period of the prior year had represented the most severely affected closure period with 6,895, or 18.4%, of total trading weeks lost in the prior year versus 3,222, or 7.5%, in the reporting period.
Bond said strategic progress centred on increasing the size of the store portfolio and improving the product offering for customers.
Pepco added 95 new stores in the third quarter with openings in all of its 14 markets, including opening its first stores in Spain, its second western European market. The programme to remodel existing stores continued with eight stores either being enlarged and/or relocated.
The rollout of its discount Dealz stores continued in Poland and Spain with 51 stores opened in the year to date and 24 in the quarter.
Steinhoff has a primary listing on the Frankfurt Stock Exchange and a secondary listing on the JSE.
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