Supply Chain Disruptions Hit Poundland Owner's Sales
Pepco Group, the owner of discount retailers Poundland, Dealz and Pepco, has reported a decline in like-for-like revenue during its fourth quarter, citing ongoing supply chain disruptions as a contributing factor. The company, which is headquartered in Warsaw, Poland, saw its like-for-like revenue decrease by 3.1% for the 51 weeks ending September 22, 2024. While the company did not provide a specific figure for the fourth quarter, it acknowledged that supply chain issues had impacted the “consistent and timely availability of stock in stores.”
Mitigating Supply Chain Challenges
Pepco Group has implemented a range of measures to mitigate the impact of supply chain disruptions, including:
- Shipping products earlier
- Optimizing shipping routes
- Utilizing faster carrier options
The company expects these measures to improve stock availability during the first half of its 2024/25 fiscal year, which begins at the end of September.
Despite Challenges, Pepco Group Remains Optimistic
Despite the challenges posed by supply chain disruptions, Pepco Group remains optimistic about its overall performance. The company forecasts an underlying EBITDA (earnings before interest, tax, depreciation and amortisation) of at least €900 million for the 2023/24 fiscal year, representing a 20% increase from the previous year. The company attributes this growth to strong year-on-year improvements in gross margin, driven by the Pepco chain.
Expansion Plans Continue Unabated
Pepco Group’s expansion plans remain on track, with the company opening 64 new stores in the fourth quarter. The company expects to end the year with 390 net new stores, in line with its prior guidance. This aggressive expansion strategy is expected to drive further revenue growth for the company.
Focus on Price Leadership and Customer Proposition
Pepco Group’s executive chair, Andy Bond, highlighted the company’s commitment to maintaining its price leadership position and enhancing its core customer proposition. He emphasized that improving supply chain capabilities is a top priority for the company, and the company is confident that it will deliver further strategic progress in the upcoming fiscal year.
A Look Ahead
Pepco Group is expected to publish its preliminary results for the 12 months ending September 30, 2024, on Tuesday, December 10, 2024. Investors will be closely watching to see how the company has navigated the supply chain challenges and whether it has been able to maintain its strong growth trajectory.
Pepco Group's Expansion Strategy: A Tale of Two Cities
While Pepco Group faces challenges on the one hand, on the other hand, it is actively expanding its operations. The company has opened 390 new stores over the year, expanding its reach across 20 countries, from eastern Europe to Ireland. This strategic expansion is a key factor driving the company's revenue growth, despite the headwinds it is facing.
This expansion is a testament to Pepco Group’s confidence in its business model and its ability to thrive in a competitive market. The company is clearly committed to growing its presence and delivering value to its customers, even as it tackles the complexities of the global supply chain.
