Poundland owner Pepco sees annual profit at upper end of expectations

LONDON, Oct 14 (Reuters) – Pepco Group , the owner of British discount retailer Poundland, forecast full-year core profit at the upper end of market expectations on Thursday, after revenue rose 19.4% helped by its aggressive store openings.

It did, however, warn that pressure on global supply chains has increased with reduced raw material availability leading to commodity inflation.

The company said that has been further compounded by constrained container capacity which significantly increased shipping costs from the final quarter.

“Through a combination of actions taken in our operating model and our unique Far East direct sourcing operation, PGS, which has strong direct supplier and factory relationships, we have quickly taken operational action to mitigate these impacts,” said Chief Executive Officer Andy Bond.

Bond said Pepco, which also owns the PEPCO and Dealz brands in Europe, planned to invest in its price proposition to maintain its price advantage.

“While the backdrop against which we operate will remain challenging for some time, we remain confident in the significant growth opportunity we have, our plans to achieve them, and meeting future market expectations,” he added.

Net new store openings were 483 in the year to Sept. 30, including the first PEPCO stores in Austria, Serbia and Spain, taking the total to 3,504.

The group, which listed on the Warsaw stock market in May with a valuation of 5 billion euros ($5.8 billion), said full-year revenue was 4.1 billion euros, with like-for-like sales up 6.5%.

PEPCO’s like-for-like sales increased 10.2% in the fourth quarter, while Poundland/Dealz’s rose 1.0%.

Pepco forecast full-year underlying earnings in a range of 640 million to 655 million euros, representing a 45% growth at the mid-point on the COVID-hit prior year.

The group’s shares, which were priced at 40 zlotys ($10.1) at the IPO, closed at 48 zlotys on Wednesday.

($1=0.8630 euros)

($1=3.9447 zlotys)

Reporting by James Davey; Editing by Subhranshu Sahu and Amy Caren Daniel

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