European discount retailer Pepco Group said its fourth-quarter underlying revenue was lower than the prior year, partly reflecting ongoing supply chain disruption.
The Warsaw-listed owner of the Pepco, Poundland and Dealz brands said on Thursday like-for-like revenue for its year to date, the 51 weeks to Sept. 22, was down 3.1%. It did not give a figure for the fourth quarter.
Supply Chain
"Pepco has continued to be impacted by supply chain issues, affecting the consistent and timely availability of stock in stores," it said.
The group said it was taking mitigating actions, including shipping product earlier, optimising shipping routes and selectively utilising faster carrier options.
It said these were expected to improve availability during the first half of its 2024/25 year.
For 2023/24 it forecast underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of "at least" €900 million, 20% higher than the prior year.
Rebuilding Profitability
The retailer will publish its full year preliminary results in December 2024.
Andy Bond, executive chair of Pepco Group, commented, "I am pleased with the positive progress we have made this year, particularly in rebuilding profitability in our core Pepco business in Central and Eastern Europe, with further opportunities for continued improvement.
"Group like-for-like revenues in the fourth quarter remained lower than the prior year, partly related to ongoing supply chain disruption, nevertheless, we expect to deliver record revenue and underlying EBITDA in FY24, driven by significant improvements in gross margin year-on-year."
Analyst Comment
Commenting on Pepco's figures, Sophie Mitchell, retail analyst at GlobalData, said, “Following a decline in like-for-like (l-f-l) group revenues of 4.3% in its Q3, the Pepco group has today announced that it anticipates group l-f-l revenues to be down 3.1% for the year.
"Although Pepco has faced issues, it anticipates that group revenue will be more than €6 billion for the year, driven primarily by a stronger performance in its H1. Crucially, due to tight fiscal discipline around investments and operations, such as closing 19 underperforming Poundland stores in its Q3, the group expects full year underlying EBITDA of €900m, an improvement of around 20% on its €753m EBITDA achievement in FY2022/23.”
Additional reporting from ESM
