Pepco Group aims to revitalise Poundland after sales fall, with plans for operational improvements

The parent company of Poundland has pledged to revive the discount retailer's fortunes following a lacklustre performance that weighed on the broader Pepco Group.

In the first quarter of its financial year, spanning the final three months of 2024, Walsall-based Poundland's sales reached €563m (£474.5m), marking a 9.3% decline year on year when accounting for constant currency, as reported by City AM.

This contrasts with Dealz's sales surge of 16.2% to €106m and Pepco's own revenue increase of 8.4% to €1.26bn. The Pepco Group's overall sales for the quarter rose by 3.1% to €1.93bn.

During this period, the group opened 95 new stores while closing 32, with 13 of these being Poundland locations. In an official statement, Poundland's owner expressed confidence in Pepco's ability to achieve profitable growth throughout the year, driven by further operational enhancements and improvements to the core customer proposition, all underpinned by a strong gross margin position.

Pepco Group CEO Stephan Borchert commented: "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."

"This reflects how we have enhanced our core offer, sharpened pricing, and increased availability, alongside continued improvements in gross margin."

"Dealz also grew LFL sales by an encouraging 6.6 per cent, as the investments we have made drove demand for its food and general merchandise ranges."

"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."

"The opening of our 5,000th store is a landmark moment for Pepco Group, highlighting the potential we have to further leverage our estate by enhancing our product offer with a compelling price proposition to delight customers and drive a stronger performance."