European discounter Pepco Group, said on Thursday the performance of its struggling Poundland business in Britain deteriorated in the Christmas quarter, with underlying revenue falling 7.3%.
The Warsaw-listed retailer, which also owns the Pepco and Dealz brands, said group like-for-like revenue fell 1.1% in the three months to 31 December, its fiscal first quarter, narrowing from 3.5% in the prior quarter.
Like-for-like (LFL), revenue rose 1.4% at the Pepco fascia and 6.6% at Dealz.
Strategic Options
The group said Poundland's decline was largely caused by continued weakness in the clothing and general merchandise segment, alongside previously flagged challenging market conditions.
Commenting on the results, Stephan Borchert, Chief Executive Officer of Pepco Group, said, “The group delivered a mixed performance in its first quarter, with a strong performance from both the Pepco and Dealz brands, partially offset by Poundland’s ongoing challenges.
"It was pleasing to see Pepco – the key engine for the group’s future strategic and financial growth – deliver its first quarter of like-for-like sales growth in more than a year.
Core Offering
"This reflects how we have enhanced our core offer, sharpened pricing, and increased availability, alongside continued
improvements in gross margin.
"Dealz also grew LFL sales by an encouraging 6.6%, as the investments we have made drove demand for its food and general merchandise ranges.
“However, Poundland saw LFLs fall, largely driven by continued underperformance in clothing and general merchandise following the transition to Pepco-sourced product, and a decline in gross margin.
Getting Poundland back on track is a key priority – we are undertaking a comprehensive assessment of the business and taking immediate measures on improving our cash performance and strengthening the customer proposition."
Additional reporting by ESM
