Poundland parent rebrands as it gears up for European expansion

The change comes after Pepco announced that it anticipated finishing its 2019 financial year with 18% EBITDA growth across its three retail brands, led by its Pepco store chain, which currently operates 1,805 stores across 11 countries including Poland and Romania.

The group said it had also completed a long-term €475m (£422.1m) refinancing, which chief executive of Pepco Andy Bond said gives the business “complete financial independence” from its parent company Steinhoff, which was rocked by an accountancy scandal in 2017 and is seeking to sell off assets to reduce its $10bn debt pile.

Bond would not be drawn on speculation of that Pepco is gearing up for a €4bn (£3.6bn) sale or flotation, but stressed that the retail group’s performance was not hampered by Steinhoff’s current ownership.

“There is no pressing need that, in order to continue to build a great business, we need to get sold. It is absolutely a decision for the shareholders, if and when they do that, and it is not an imperative for management one way or the other. We can build a great business here or under different ownership,” he said.

Approximately 80% of group revenue comes from Pepco’s European businesses, PepCo and Dealz, and the business plans to open 300 stores across the two fascias per year. Across the group, Pepco operates 2,698 stores across 14 countries.

In contrast, UK subsidiary Poundland is planning no bricks-and-mortar expansion and will instead focus on either relocating current stores to larger locations, or exiting or securing rent reductions across its 840-strong store estate, with 87% of store leases set to expire within five years.

The value retailer anticipates it will be able to secure average rent reductions of 25%, which will net a €20m (£17.8m) cost-saving across the business. Chief financial officer Neil Wharton said he did no anticipate a “significant material change” to the size of Poundland’s store estate in the coming years.

Poundland is also rolling out its trial of ‘simple’ pricing, which includes eight price points ranging from 50p to £5, following a successful trial across 25 stores.

Bond, said: “The renaming of our business to Pepco Group follows another successful year for all our trading brands. At the group level we anticipate EBITDA will increase by 18% year on year, giving a total growth over the past three years of 140%.

“Our new name is more distinctive and clearly links the group to its largest operating company and source of future growth. Following a successful refinancing and with a clear, focused strategy in place, we remain well positioned to continue our growth and deliver our ambition to become Europe’s pre-eminent discount variety retail business.”