European discount retailer Pepco Group has reported a substantial 10.2% year-on-year revenue growth in fiscal 2024 (FY24), reaching €6.16bn ($6.48bn) compared to €5.59bn in FY23.
The increase is primarily attributed to the group's aggressive store expansion strategy. Like-for-like (LFL) revenue fell 3.2% during the year.
The company, which owns the Pepco and Dealz brands in Europe and Poundland in the UK, opened 392 net new stores during the year, culminating in a total of 4,948 stores as of 30 September 2024.
Notably, Pepco brand revenue surged by 14.2% in FY24, while Poundland saw a marginal increase of 0.2%. Dealz Poland experienced a remarkable 39.5% jump in revenue.
Gross profit for the group rose sharply by 20.9% to €2.7bn from the previous year's €2.23bn, and its gross margin also improved significantly by 390 basis points (bps) to 43.9% in FY24, with Pepco's margin increasing by an impressive 530 bps year-on-year.
Pepco saw a gross margin of 46.9%, followed by Poundland at 38.6% and Dealz Poland at 33.4%.
The group's underlying EBITDA (earnings before interest, taxes, depreciation and amortisation) for the year was €944m, a 25.2% increase, driven largely by Pepco's EBITDA which soared 41.7% to €785m.
However, Poundland's EBITDA declined by 21.5% to €153m, while Dealz' EBITDA rose very significantly by 242.9% to €24m.
Despite these positive figures, the group reported a net loss for the year of €662m due to a non-cash impairment of €775m related to Poundland's weak performance and outlook.
The reported loss per share stood at 114.9 cents in FY24, compared to earnings per share of 18.8 cents in FY23.
Pepco Group non-executive chair Andy Bond said: “I am proud of the progress we have made over the last 12 months. We started the year with a number of objectives which included rebuilding Pepco’s profitability in its core Central and Eastern European market, gross margin recovery, adopting a more disciplined approach to investment with more targeted growth, reviewing underperforming areas of the business and delivering stronger cash generation.
“We have delivered on these objectives, but there remains more to achieve. As a result of renewed confidence in our future, we are announcing an inaugural full-year dividend for the group.
“I am pleased to have handed the reins of the business over to our new CEO, Stephan Borchert, effective from 1 October 2024. Stephan brings a wealth of experience in retail businesses internationally alongside a strong track record of delivering results, and I look forward to working with him as he leads this business to future success.”
In February 2924, Pepco Group disclosed a significant financial loss of €15.5m following a “sophisticated, fraudulent” phishing attack on its Hungarian business.
