Pepco Group expects Poundland exit by September
European discount retailer Pepco Group is still exploring options for the separation of its struggling Poundland business in Britain, with an exit expected by September, the company said on Thursday.
The Warsaw-listed group, which also owns the Pepco and Dealz brands, also warned that the 818-store Poundland might not make a profit in its 2024/25 financial year.
Pepco Group said in March that it had attracted interest from potential buyers of the Poundland chain. The Sunday Times reported on May 17 that U.S.-based investor Gordon Brothers has emerged as the frontrunner among a clutch of potential suitors. Gordon Brothers did not respond to a request for comment.
"We continue to undertake a process to separate Poundland from the group, as part of a wider strategy shift away from FMCG (fast-moving consumer goods)," said Pepco Group CEO Stephan Borchert.
The group said that Poundland continued to face "highly challenging trading conditions" in its half-year to March 31, with revenue down 6.5% and underlying earnings before interest, tax, depreciation, and amortization (EBITDA) down 75% at 22 million euros ($24.9 million).
The group made another cut to its full-year outlook for Poundland, forecasting underlying EBITDA between zero and 20 million euros, versus previous guidance of 50 million to 70 million euros.
To reflect deterioration in Poundland's trading and its weaker outlook, the group booked a non-cash impairment charge of 234 million euros. It had already booked a charge of 775 million euros in December.
The group as a whole reported a 5.5% fall in first-half underlying EBITDA to 460 million euros, despite revenue being up 4.3% to 3.34 billion euros.
It maintained guidance for the Pepco brand to deliver "high single-digit" revenue and EBITDA growth in 2024/25 and plans 250 net new stores in the year.
Shares in the group are up 12% so far this year.
($1 = 0.8821 euros)
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