European discount retailer Pepco Group has said it will exit the Austrian market, saying it does not expect appropriate returns in the country.
"The Group has today concluded that it will cease its operations in Austria, as it does not foresee that the Austrian market will reach the appropriate level of returns expected," it said in a regulatory filing.
Austrian Presence
The Warsaw-listed owner of the Pepco, Poundland and Dealz brands, which at had 4,832 stores end-December, entered the Austrian market in September 2021 and operates 73 stores in the country.
In October, Pepco said it would slow down its store opening programme to focus on rebuilding profitability, but it still plans to open at least 400 net new stores in 2023/24.
The exit from Austria will improve the group's cash flow and underlying profitability for 2024, it said, adding it would enable it to focus on other markets where it can generate higher returns.
Growth Strategy
It also said the decision does not impact its existing growth strategy in Western Europe, or impact its operations elsewhere.
Trading conditions continue to be challenging across much of Europe, Pepco said last month, though it remained 'cautiously optimistic' for 2024.
According to a trading update last month, the company recorded €1.9 billion in group revenue for the fiscal first quarter ending 31 December, marking an 11% increase on a constant currency basis.
Executive chair Andy Bond stated at the time that despite potential external factors like industry-wide supply chain disruption, the positive trajectory is anticipated to persist throughout FY24.
Additional reporting by ESM
