Pepco plans to get Poundland ‘back on track’ following weak Q1 sales
The group attributed Poundland’s performance to a ‘more difficult’ sales environment and consumer backdrop in the UK
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Poundland owner Pepco has pledged that getting Poundland “back on track” is its key priority after sales at the discount retailer fell over the Q1 period. In the quarter ended 31 December, Poundland saw like-for-like sales fall by 7.3%, largely driven by a “continued underperformance” in clothing and general merchandise, with double-digit declines across both categories. According to the group, this in part followed a transition to Pepco-sourced products.
Sales in Poundland’s core FMCG category were also negative, albeit against a “highly competitive” environment in the UK.
The group attributed Poundland’s performance to a “more difficult” sales environment and consumer backdrop in the UK, alongside margin pressure and an “increasingly higher” operating cost environment.
It added that the “toughest comparative quarter for Poundland is now behind us”, as the same quarter last year represented a period prior to the changes made in its clothing and GM ranges.
In light of this, it expects the negative sales performance to moderate through the year, but added it is “continuing a comprehensive assessment of Poundland to recover trading and get the business back to its core strengths”.
Stephan Borchert, CEO of Pepco Group, said: “The group delivered a mixed performance in its first quarter, with a strong performance from both the Pepco and Dealz brands, partially offset by Poundland’s ongoing challenges. It was pleasing to see Pepco – the key engine for the group’s future strategic and financial growth – deliver its first quarter of like-for-like sales growth in more than a year.
“However, Poundland saw LFLs fall, largely driven by continued underperformance in clothing and general merchandise following the transition to Pepco-sourced product, and a decline in gross margin. Getting Poundland back on track is a key priority – we are undertaking a comprehensive assessment of the business and taking immediate measures on improving our cash performance and strengthening the customer proposition.”
