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Pepco Group has reported a £675m impairment charge on its UK subsidiary Poundland, as a result of “a significant decline in performance in FY24 and weaker outlook for profitability amid increasing competition and cost challenges”.
The charge primarily reflects the goodwill from Pepco Group in relation to the Poundland acquisition.
Overall revenue at Poundland edged up 0.2% year-on-year while EBITDA declined 21.5% to €153m (£126.6m), for the year ended 30 September 2024.
Furthermore, Poundland reported a net loss of £548m for the period, driven by the impairment charge.
Poundland’s performance was largely attributed to increased competition, rising costs and particular challenges in its clothing and general merchandise ranges after transitioning to Pepco-sourced products.
Group CEO Stephan Borchert said: “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.”
Despite trouble at Poundland, Pepco Group posted record revenues of £6.2bn, up 10.2% year-on-year, driven by growth in its other divisions, including Dealz.
