Pepco Group, the fast-growing pan-European variety discount retailer, today reports preliminary unaudited results for the 12 months ending 30 September 2024.¹

SUMMARY

• Record FY24 Group revenue of €6.2bn, up 10.2% year-on-year (“y-o-y”), driven by new store growth
• Group gross margin sharply improved to 43.9%, up 390 basis points y-o-y, led by Pepco
• Record underlying EBITDA (IFRS 16) of €944m up 25.2%, driven by Pepco EBITDA up 41.7%
• Reported net loss for the year of €662m, related to a non-cash €775m impairment of Poundland, following weak performance and outlook
• Free cash flow of €168m, driving reduced net debt (pre-IFRS 16) to €256m (0.5x pre-IFRS 16 leverage ratio)
• Strong Group balance sheet and liquidity profile
• Initiating new capital returns policy and inaugural FY24 full year dividend

FINANCIAL PERFORMANCE

Note:

• Numbers above based on continuing operations unless stated otherwise.
• Austria is classified as a discontinued operation following the Group’s exit of Pepco Austria. All numbers above (including comparators) exclude Austria.

• Group revenue of €6,167m, growing +10.2% y-o-y
  • Pepco revenue +14.2%; Poundland +0.2%; Dealz Poland +39.5%
• LFL revenue declined by 3.2% during FY24
  • Pepco LFL of -2.8%, albeit with an improving performance through the year, and a positive LFL since September 2024
  • Poundland LFL (-3.6%) and Dealz Poland LFL (-4.8%) impacted by clothing and GM transition to Pepco-sourced product
• The Group opened 392 net new stores during the year (FY23: 648) leading to a total of 4,948 stores in operation as at 30 September 2024
  • Pepco, Poundland and Dealz Poland added 331, 13 and 48 net new stores, respectively
  • Streamlined new-store-growth reflects refocus on Pepco CEE, which generates highest returns across Group
• Gross margin improved 390 basis points (“bps”) to 43.9% for the year, driven by sharp recovery in Pepco (+530 bps y-o-y)
  • Pepco gross margin of 46.9%; Poundland 38.6%; Dealz Poland 33.4%
• Record underlying EBITDA (IFRS 16) of €944m up 25.2% y-o-y, with EBITDA margin up 180 bps to 15.3%
  • Strong Pepco EBITDA growth of 41.7% to €785m; Poundland EBITDA down 21.5% to €153m; Dealz EBITDA up 242.9% to €24m
• Underlying PAT of €179m up 14.0% y-o-y
• Poundland impairment charge of €775m (primarily goodwill), following a significant decline in performance in FY24 and weaker outlook for profitability amid increasing competitive and cost challenges
• Strong balance sheet and liquidity profile; net debt at end of FY24 was €256m (pre-IFRS 16), representing 0.5x LTM EBITDA (pre-IFRS 16) leverage, well within the Group’s financial covenants

Andy Bond, Non-Executive Chair, said:

“I am proud of the progress we have made over the last 12 months. We grew underlying EBITDA by a quarter to €944m across the Group, ahead of expectations, with a strong recovery in gross margin of almost 400 basis points, driven by the performance of our core Pepco brand.

“We started the year with a number of objectives which included rebuilding Pepco’s profitability in its core Central and Eastern European (CEE) market, gross margin recovery, adopting a more disciplined approach to investment with more targeted growth, reviewing underperforming areas of the business and delivering stronger cash generation. We have delivered on these objectives, but there remains more to achieve. As a result of renewed confidence in our future, we are announcing an inaugural full year dividend for the Group.

“I am pleased to have handed the reins of the business over to our new CEO, Stephan Borchert, effective 1^st October 2024.  Stephan brings a wealth of experience in retail businesses internationally alongside a strong track record of delivering results, and I look forward to working with him as he leads this business to future success.”

Stephan Borchert, Chief Executive Officer, said:

“Pepco Group has very attractive, market-leading retail businesses, providing great product range, value and convenience to over 60 million customers each month across Europe. 

“Within the Group, I see the Pepco concept itself as our key engine for future strategic and financial growth, particularly in Pepco’s CEE heartland.  Pepco generates the vast majority of the Group’s earnings and our highest returns on capital – we plan to further build on that strong base. In the year ahead, our core focus at Pepco will be to deliver improved like-for-like revenues. Pepco’s like-for-like performance has been positive since the start of September – an encouraging start.

“At Poundland, recent performance has been very challenging, impacted by declines in clothing and general merchandise following the transition to Pepco-sourced product ranges at the start of the year. We are taking swift action to get Poundland performance back on track, focusing on a return to Poundland’s strengths. We will also closely evaluate Poundland’s overall competitive positioning and requirements for future success as an FMCG-led format. We will provide further updates on Poundland during the first half of 2025.

“I am excited to join Pepco Group at this important stage in its evolution toward a company focused on targeted new-store expansion, higher capital returns, and growing earnings and free cash flow. We plan to deliver further strategic and financial progress during FY25, as I will describe in more detail at our Capital Markets Day in March 2025.”

CONFERENCE CALL

Pepco Group will host a conference call for analysts and investors to discuss its FY24 preliminary results on Tuesday 10 December 2024 at 8.30am GMT (9.30am CET). Investors and analysts who would like to participate in the Q&A session can dial in using the relevant number below and quote “Pepco Preliminary Results“.

Alternatively, a live audio webcast of the call will be available via the following link:

https://brrmedia.news/PCO_FY_24

FORTHCOMING DATES

The Group intends to issue the following update in the near future:

• Q1 FY25 trading update: 16 January 2024
• 2025 Capital Markets Day (London): 6 March 2024

ENQUIRIES

Investors and analysts

Tej Randhawa, Investor Relations                           +44 (0) 203 735 9210

Joanna Kwak, Investor Relations                             +44 (0) 203 735 9210

Media

Rollo Head, FGS Global                               +44 (0) 7768 994 987

James Thompson, FGS Global                          +44 (0) 7947 796 965

Blake Gray, FGS Global                                    +44 (0) 7842 631 475