Pepco plans to create 13,000 jobs over the next three years
Company bets on shoppers heading to cheaper stores after Covid-19 and hunt for bargains amid rising prices
London — Pepco Group plans to create about 13,000 jobs across Europe over the next three years as it aggressively opens new stores.
Most of the jobs would be in continental Europe, as the owner of the discount chains Pepco, Poundland and Dealz, bets that shoppers will flock to cheaper stores after the devastation of the pandemic and hunt for bargains amid inflation, CEO Andy Bond said
While many European retailers have shifted operations online, shut stores and cut jobs to survive Covid-19, Pepco is heading in the other direction.
“Unlike many bricks and mortar retailers which are all about stories of ‘haven't we done a good job where we’re staying alive’, we’re very confident about our growth,” said Bond, a former boss of British supermarket chain Asda.
Bond has said Pepco could benefit from inflationary pressure as people become more price-sensitive.
Pepco Group, which listed on the Warsaw stock market in May and is now valued at €6.9bn, employs about 35,000 people, and has about 3,400 stores in 16 countries. It will open its 17th outlet, in Austria, in September.
The group is targeting more than €1bn in core earnings within five to seven years. In June it reported first-half underlying earnings of €324m, up 16.8% from the same period a year earlier.
It draws comparisons with British discount retailer B&M, which has seen its shares rise 125% since the day before Britain entered its first pandemic lockdown.
Like many discount retailers, Pepco hasn’t embraced online deliveries when its average value oif its basket is €7-€8.
“Our consumer dynamic, our geographical spread and our business model make us most defendable against online and most unlikely to go online,” said Bond.
Poundland is, however, conducting a small online trial in central England to better understand customer demand.
“I’ve been very sceptical. However, it is such a macro trend, we’ve got to learn about it, because I have no intention of looking like the idiot who called the world flat when it was actually round,” said Bond.
If there were customers willing to spend a basket of about £60 it could be viable, he said. The group is also looking for a partner in Eastern Europe for a trial.
Pepco shares have soared more than 36% since listing. Priced at 40 zlotys at the IPO, they were trading at 54.5 zlotys on Friday.
“I think it’s almost the optimum outcome both for buyer and seller that the share price goes up progressively post float,” said Bond, who retains shares worth about €44.2m.
SA conglomerate Steinhoff, which is still grappling with the fallout from a 2017 accounting scandal, retains the majority of Pepco Group’s equity, though that holding is controlled by creditors.
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