Pepco sells more and starts buying back shares

Pepco Group maintained its full-year assumptions regarding revenue and EBITDA growth and the opening of new branches.

– The group’s continued development, its strong profit potential, strong cash generation and the management board’s belief that the current share valuation largely does not reflect the company’s future prospects are the basis for the decision to launch a share buyback program worth up to EUR 50 million, with a view to further increasing shareholder value – announces Stephen Borchert, CEO of Pepco Group.

Pepco Group maintains revenue and EBITDA growth forecasts

Revenue and underlying EBITDA (IFRS 16) growth is expected to reach high single-digit levels, while 250 net new stores are expected to be added in fiscal year 2025 (October 2024-September 2025). "Our Pepco and Dealz brands are achieving solid results in line with their targets. We previously presented assumptions that the Pepco brand will achieve year-on-year revenue and underlying EBITDA (IFRS 16) growth in fiscal year 2025 at high single-digit levels, which we maintain. Dealz is similarly expected to achieve results consistent with previous information, with a full-year EBITDA (IFRS 16) of approximately €30 million," the management board announced.

Pepco Group reported a 2.7% increase in revenue (at constant exchange rates) in the third quarter of the 2024/25 financial year, reaching €1,424 million. Excluding the Poundland chain, which was sold on June 12, sales increased by 7.7% to €1,078 million. Pepco's revenue alone reached €997 million (a 7.4% increase), while Dealz sales rose by 11.2% to €80 million. Like-for-like sales at Pepco and Dealz Poland increased by a combined 2.6%, while gross margin improved by 180 basis points year-on-year. The results were driven by improved product availability, a greater focus on pricing for top-selling products, and an improved product range.

Share buyback program up to EUR 50 million and expansion of the chain by 250 new stores

"Our third-quarter results reflect the consistent implementation of the strategy within the 'new' Pepco group and the actions we have taken to ensure more stable results. The Pepco brand achieved very strong results in the third quarter, recording record revenues exceeding €1 billion, a third consecutive quarter of like-for-like sales growth, and further gross margin growth," commented Borchert.

In the third quarter, 45 new Pepco and Dealz stores opened. At the end of June, the "new group" network, excluding Poundland, had 4,276 stores.

In mid-June, the board announced the completion of the sale of Poundland to Gordon Brothers. Poundland's removal from the group structure has a positive impact on revenue growth and contributes to higher profitability and margins. "Following the completion of the Poundland sale, the 'new' Pepco group now has a simpler structure, which allows us to be optimistic about the future," says Borchert.

The first phase of a share buyback program worth up to €50 million will begin in early July, the company said, "due to the management's belief that the current share price does not materially reflect the group's future prospects or its internal earnings potential, and to support further shareholder value enhancement." The buyback program is expected to run until September 10, 2025.