Pepco, the European retail group that owns the Pep&Co clothing label, is thriving in spite of the challenging economic climate. The company recently announced that its underlying core earnings for the fiscal year ending in September are expected to be between €730 million and €750 million on a constant currency basis, meeting expectations. On an actual currency basis, the figures will range from €720 million to €735 million. Pepco’s success can be attributed to several factors.

Firstly, the company saw a 17.4% increase in constant currency group revenue, amounting to €4.82 billion. This growth was driven by the opening of 516 new stores, surpassing their initial plans. However, it’s not just store expansion that has contributed to Pepco’s success. The company also achieved a 5.2% growth in like-for-like sales during the period, with a particularly impressive 15.5% surge in September alone. This suggests that budget-conscious consumers remain attracted to Pepco as they seek more affordable options.

While Pepco’s overall performance is strong, there are some market-specific differences. The European Pepco chain experienced a remarkable 28.7% growth in revenues and a 7.4% rise in like-for-like sales. On the other hand, the Poundland Group unit, which includes Dealz, reported a 5% increase in revenues and a smaller 2.6% rise in like-for-like sales. Poundland primarily operates in the UK and Ireland, while Dealz is present in Ireland and Poland. Pepco is currently rebranding Dealz to the Pepco banner in Spain and testing the same transformation in the Irish market.

Inflation is a concern for Pepco, but in key markets like Poland, Hungary, and Romania, inflation in clothing and footwear is running at only around a third of the headline inflation rate. The clothing and food categories remain resilient within the Polish and wider Central and Eastern European retail sector.

In the UK, Pepco acknowledges the challenging outlook due to constraints on consumers’ disposable income. However, the company’s value-driven proposition becomes even more relevant in these difficult times, attracting new customers and expanding its target market across Europe. Pepco has also noted some positive developments in the supply side conditions of the retail sector, such as fluctuating cotton prices that remain below recent peaks and a slight easing of freight costs. However, supply chains have yet to fully recover from the impact of the pandemic.

Looking ahead, Pepco plans to introduce the Pepco brand in Greece and Portugal in the upcoming fiscal year. The company is also conducting trials of its comprehensive range of clothing, general merchandise, and fast-moving consumer goods under the Pepco banner in select stores in Ireland.

Overall, Pepco’s performance remains strong, and the company is actively pursuing expansion opportunities.

For more information on Pepco’s performance, click here.

To learn more about Pepco’s plans for expansion, click here.