Steinhoff International’s European discount retailer Pepco said yesterday that its second-quarter revenue surged 23%, boosted by store rollout, despite a continued inflationary environment for both customers and the business.
Despite the strong update, Steinhoff’s share price slipped 4.55% to 21c in intraday trade. Its share is down 92.49% in a year.
In its trading update for the second financial quarter of the 2023 financial year ending March 31, 2023, Pepco Group, the owner of the Pepco and Dealz brands in Europe and Poundland in the UK, said its revenue increased by more than 22.8% in constant-currency terms to about €2.8 billion (almost R56bn), driven by its Pepco brand, which reported revenue growth of 36.9%.
Pepco Group CEO Trevor Masters said: “Pepco has recorded an encouraging second-quarter trading performance against the backdrop of a continuing inflationary environment for both customers and the business.”
He said the demand for the group’s products remained strong, and double-digit like-for-like revenue growth demonstrates solid progress for the group.
“We have continued to deliver against our strategic priorities, including the successful store refit strategy and profitable store expansion programme – our biggest source of value creation,” Masters said.
The group, of which Steinhoff owns 79%, said it added 166 net new stores as it planned to open 550 net new stores in its financial year. Like-for-like sales were up 8.5% year-on-year, with Pepco advancing 10.7% and the Poundland Group 5.7%.
According to Pepco, for the first time, the number of net new store openings in western Europe, including its 100th store in Italy, outweighed the number of openings in central Europe across the quarter.
The group said this was a strategically important milestone for it, and the continued positive consumer response to its proposition across those markets demonstrates the whole of Europe is addressable to it.
“We will look to leverage this opportunity further over the rest of the year, and our plans to launch the Pepco brand in Portugal and Bosnia and Herzegovina in the second half of 2023 remain on track,” Masters said.
He said while the consumer environment remained challenging due to inflationary pressures, Pepco’s strategy of price leadership gave it continued conviction in its ability to win customers and market share, which it had grown in its key markets over the past quarter.
“We remain confident about meeting our guidance for full-year Ebitda (earnings before interest, taxes, depreciation and amortisation), including our targets for the new store opening programme.”
Looking ahead, the retailer said the macro environment it faced was more balanced now than in the past 18 months with product input costs starting to ease, though headwinds remained on other costs, including energy.
“I would also like to take this opportunity to formally welcome Neil Galloway to Pepco as the group chief financial officer. His impressive track record and experience make him a valuable addition to the leadership team as we continue to accelerate and deliver on our proven strategy,” Masters said.
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