The trading group Pepco Group NV has presented its preliminary interim results for the first half of the 2026 financial year (at the end of March). The figures reflect a significant jump in profitability and a strategic focus on the core textile business.
The pan-European discount retailer achieved sales of 2.47 billion euros. This corresponds to an increase of five percent. Over the entire half-year, the group achieved currency-adjusted sales growth of 3.7 percent. The main driver was flagship brand Pepco, while full-year adjusted group profit growth after tax is expected to rise by 52.3 percent thanks to strict cost discipline and margin improvements. Adjusted profit after taxes of 198 million euros is currently expected.
“Beyond the sales development, our profitability has improved significantly,” said Pepco CEO Stephan Borchert.
Focus on clothing and general merchandise is having an impact
The results reflect the ongoing implementation of the transformation plan presented in March 2025. A central pillar of this strategy is the simplification of the group structure by gradually exiting the FMCG (fast-moving consumer goods) segment. As a result, the company focuses its resources on higher-margin apparel and general merchandise categories.
Without the dampening impact of the FMCG exit, the group’s like-for-like sales growth (LFL) was plus 3.6 percent in the first half of the year. The core brand Pepco impressed with LFL growth of 4.6 percent (excluding FMCG), recording positive like-for-like development for the sixth quarter in a row.
Expansion plans in Western Europe raised
Improved branch profitability in Western Europe, particularly on the Iberian Peninsula and Italy, has prompted management to significantly increase the regional expansion target. The group now plans to open at least 600 new brick-and-mortar stores in its existing Western European markets between fiscal year 2027 and fiscal year 2030. This would effectively double its regional footprint.
In the first half of the year, the group opened a net 61 new stores across its portfolio. The European network therefore includes a total of 4,420 locations. While expansion in Southern, Central and Eastern Europe continues at a rapid pace, the group is also planning a carefully managed test run of new branches in selected areas of Ukraine by the end of the 2026 calendar year. The aim is to leverage existing brand awareness among returned citizens.
Expanded capital return concept and structural changes
The improved branch profitability in Western Europe – particularly in Italy and the Iberian Peninsula – is causing management to adjust regional expansion goals. Between the 2027 and 2030 financial years, the group plans to open at least 600 new brick-and-mortar branches in its existing Western European markets, effectively doubling its presence there.
At the end of the reporting period, the core Pepco brand alone operated over 4,000 locations in Europe. While the expansion in Eastern and Southern Europe continues as planned, the group is also preparing a controlled test run with new branches in selected regions of Ukraine for the end of the 2026 calendar year.
Raised annual forecast and capital return
Due to the strong performance in the spring, Pepco Group has raised its forecast for the full year 2026. The company now expects adjusted group EBITDA growth in the low double-digit percentage range (previously: at least nine percent). The expected reported overall sales growth remains at six to eight percent.
Based on a solid balance sheet, the group also announced an optimized capital allocation concept. A special capital repayment of up to 400 million euros is planned for the 2026 financial year via a tender process. From the 2027 financial year, excess free cash flows will flow to shareholders via dividends and share buybacks, with the aim of gradually increasing the regular payout ratio to 40 percent.
Dealz before spin-off – new impulses in management
The development of the portfolio brands was twofold. While the Pepco format contributed the lion’s share of the consolidated result, Dealz’s business in Poland remained in decline with an LFL sales decline of almost ten percent. The group remains committed to its plan to fully complete the exit from the Dealz business by the end of the 2026 financial year.
In order to underpin the transformation in the fashion business in terms of personnel, the group announced strategic new additions: Sabine Zantis-Moeller, previously in a senior marketing role at the shoe retailer Deichmann, took over the position of Chief Customer Director in March 2026. Robert Pernak is also strengthening the management team as Head of Pricing and Sławomir Nitek as the new Country Manager for Poland.
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