Discounter Pepco’s Sales Hurt by Supply Chain Disruption

By James Davey

LONDON (Reuters) -European discount retailer Pepco Group said its fourth-quarter underlying revenue was lower than the prior year, partly reflecting ongoing supply chain disruption.

The Warsaw-listed owner of the Pepco, Poundland and Dealz brands said on Thursday that while total revenue for its fiscal year to date, the 51 weeks to Sept. 22, was up 10%, driven by new store openings, its like-for-like revenue was down 3.1%.

It did not give a figure for the fourth quarter.

Disruption to shipping through the Suez Canal, due to attacks by Iran-aligned Yemeni Houthi militants in the Red Sea, has continued through 2024.

Pepco has continued to be impacted by supply chain issues, affecting the consistent and timely availability of stock in stores,” the group said.

It was taking mitigating actions, including shipping product earlier, optimising shipping routes and selectively using faster carrier options, which were expected to improve availability during the first half of its 2024/25 year.

The group said trading in Poundland and Dealz had largely followed the trends of previous updates, with performance affected by the transition to Pepco sourced clothing and general merchandise.

For 2023/24 the group forecast underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of “at least” 900 million euros ($1 billion), 20% higher than the prior year.

That outcome reflected full-year revenue in excess of 6 billion euros and improvements in gross margin.

“While there is much more to do, particularly around like-for-like sales progress, we remain committed to expanding our price leadership position, enhancing the core customer proposition and improving our supply chain capabilities,” executive chair Andy Bond said.

($1 = 0.8972 euros)

(Reporting by James Davey; Editing by Kim Coghill and Mark Potter)