Pepco Group faced a demanding fiscal year, primarily due to setbacks at its UK subsidiary, Poundland.
- A significant £675m impairment charge was recorded due to Poundland’s reduced performance.
- Poundland’s minor sales growth of 0.2% contrasts a steep 21.5% EBITDA decline.
- Pepco’s CEO is taking steps to return Poundland to its strengths amidst rising competition.
- Despite Poundland’s struggles, Pepco posted strong revenue figures, buoyed by other divisions.
Pepco Group encountered a tough financial landscape as it registered a substantial £675m impairment against its investment in Poundland. This major write-off stemmed from a sharp downturn in Poundland’s performance during the fiscal year 2024, notably affected by intense competition and rising costs.
Poundland experienced only a slight uptick in overall revenue, with a year-on-year increase of just 0.2%. The real challenge was a significant drop in EBITDA, which fell 21.5% to £153 million (€126.6 million). This decline was largely due to setbacks in its clothing and general merchandise segments after transitioning to Pepco-sourced products earlier this year.
Stephan Borchert, Pepco’s CEO, acknowledged the difficulties, stating that Poundland’s current performance was hampered by the shift to Pepco-sourced goods, affecting its clothing and general merchandise categories. He emphasized a renewed focus on Poundland’s strong suits and a meticulous evaluation of its market position and future needs as an FMCG-led enterprise.
In contrast to the troubles at Poundland, Pepco Group as a whole managed to achieve a record revenue of £6.2 billion, marking a 10.2% increase from the previous year. This growth was largely attributed to the success of Pepco’s other divisions, such as Dealz, and a robust expansion strategy across Central and Eastern Europe, which saw the addition of numerous new stores.
While like-for-like revenue across Pepco’s businesses slightly decreased by 3.2%, the group’s underlying EBITDA rose by 25% to £824m, signaling strong overall performance. The company is looking forward to further strategic growth, especially within its key markets in Central and Eastern Europe, where Pepco continues to plan future expansions.
Pepco’s efforts to navigate challenges reflect resilience and strategic intent for future growth.
