Discounter Pepco accelerates expansion in Western Europe
Pepco Group's Expansion Plans and Financial Performance
Accelerated Store Openings in Western Europe
May 21 (Reuters) - Pepco Group is accelerating its European expansion, the discount retailer said on Thursday, with at least 600 new stores expected to open in its existing Western European markets between 2027 and 2030.
Profitability in Spain and Italy Drives Growth
The Warsaw-listed discounter, which last year sold the struggling Poundland chain in Britain, cited strong profitability seen in its Spanish and Italian stores for the decision.
"The accelerating store economics we are seeing in Western Europe give us the conviction to expand on our ambitions there," CEO Stephan Borchert said in a statement.
Doubling Presence and New Market Entry
The planned store openings would double the group's presence in the region, Borchert said. It will also launch a small trial of stores in Ukraine.
Financial Results and Strategic Reset
Strong Financial Performance
Pepco reported a 17.5% rise in its underlying core profit to €516 million ($600 million) for the first half of its financial year.
Store Openings and Supply Chain Impact
The group, which had raised its full-year forecast in April, said it was on track to meet its target for 250 new store openings this year, and reiterated the impact of the Iran war on its supply chain had so far been minimal.
Strategic Reset and Brand Focus
This year's results are a key test for Pepco's strategic reset after it sold Poundland to focus on its namesake brand. It said the divestment of its Dealz brand, in line with the new strategy, would also be completed this year.
Capital Return and Dividend Policy
The strong results prompted Pepco to announce a one-off capital return of up to €400 million. It will also progressively increase its dividend payout ratio towards 40% of its underlying profit over the next few years.
Additional Information
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(Reporting by Alicja Surdy, editing by Milla Nissi-Prussak)
