SUMMARY
• H1 Group revenue of €3,200m with constant currency growth of 11% versus last year
• H1 Group like-for-like (LFL) revenues down by 2.5% (H1 FY23 LFL +11.1%)
• Pepco: -3.2% LFL against a tough comparative period where LFL sales were up by +15.8% in H1 FY23
• Poundland: -0.7% LFL, with a positive FMCG performance offset by a weaker performance in clothing and general merchandise (GM) impacted by transition to new Pepco ranges
• Dealz: -4.6% LFL impacted by the planned transition to Pepco-sourced GM
• Strong recovery in Group gross margin has continued, driven by Pepco
• New store openings moderated in the second quarter as expected, with 86 net new stores opened across the Group in Q2, compared to 203 net openings in Q1.
Commenting on the results, Andy Bond, Executive Chair of Pepco Group, said:
"We continued to make good progress against our renewed strategy in H1, growing revenue by 11% to €3,200m and driving a positive trajectory in gross margin. While the trading environment remains challenging, we are encouraged by signs of an improved performance in some of our core Pepco Central and Eastern Europe markets - a key geographical region for the Group - during the second quarter. We expect a continued upward trajectory in LFL sales at Pepco in H2.
"We remain focused on cost control and are on track to deliver a significant reduction in our capex this year - making us increasingly confident on enhanced free cash flow generation in FY24. Our margin improvements are being driven by a combination of macro-factors from easing input costs, including commodity and freight, to more favourable foreign exchange, as well as self-help levers including enhanced purchasing and supply chain efficiencies.
"As planned, we've taken a measured approach to store openings in Q2, with new store growth focused in markets where we are confident of generating the highest returns. This targeted approach will continue over the coming quarters, as part of our renewed strategy to drive core profitability through a more disciplined approach to growth and investment.
"The Group is confident about delivering profitable growth this financial year - reflecting a stronger and more resilient business - as we continue to move forward to build Europe's leading variety discount retailer."
Press release:
https://www.pepcogroup.eu/media-news/pepco-group-n-v-second-quarter-fy24-trading-update/
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