Pepco Group Reaffirms 2024 Targets Despite Geopolitical Uncertainty

Discounter Pepco confirms outlook, says Middle East war impact ‘minimal’

Pepco Group’s Financial Performance and Strategic Developments

Full-Year Guidance and Resilience Amid Geopolitical Uncertainty

March 26 (Reuters) – European discount retailer Pepco Group said on Thursday it remained confident in delivering full-year results in line with the guidance set out last December, despite the uncertain consumer and geopolitical backdrop.  

The conflict in the Middle East has so far had a minimal impact on the company, Pepco said, adding it was well positioned to manage the evolving situation, having invested in the resilience of its supply chain in recent years.

Stock Availability and Supply Chain Management

“The business has a healthy availability of stock across our distribution centres, partly reflecting a higher level of shipped inventory compared to the same period last year due to an earlier Chinese New Year and Easter period,” Pepco said in the pre-close statement for the first half of its financial year.

It added the group has structurally lower exposure to short-term demand volatility and fast-fashion cycles, supported by longer-term sourcing and planning.

Revenue Growth and Brand Performance

In the 25 weeks to March 22, almost the first six months of the fiscal year that started in October, group revenue grew 3.7% on a constant currency basis.

Trading in the Pepco brand, which makes up the core of the group’s business, accelerated over the recent weeks, following a strong customer response to the launch of its spring/summer and Easter collections, it said.

Divestment and Expansion Plans

Pepco said that the process of divesting Dealz was on track to be completed during the current financial year, while it continues the expansion of its namesake brand in Europe.

Geographical Expansion and Store Growth

“In June, we will enter North Macedonia, further strengthening our presence in Central and Eastern Europe and taking Pepco to 19 countries overall,” CEO Stephan Borchert said.

“Strong performance and operational execution in Iberia and Italy is driving consistent, profitable store growth, giving us increasing confidence in the potential future growth opportunity for this region,” he added.

At the end of February, Pepco operated 4,046 stores. It expects to add around 250 stores to its network during the fiscal year.

Market Reaction

At 0809 GMT, the company’s shares were up 1.1%.

(Reporting by Adrianna Ebert in Gdansk; Editing by Milla Nissi-Prussak)