The retail group Pepco Group NV was able to increase its sales significantly in the first half of the 2022/23 financial year, but had to accept a significant drop in profits. The parent company of the discounters Pepco, Poundland and Dealz explained in an interim report published on Tuesday that higher costs and investments as well as negative special effects would have weighed on the result.
In the months of October to March, group sales amounted to EUR 2.84 billion, which corresponds to an increase of 19.7 percent compared to the same period last year. Adjusted for changes in exchange rates, revenues grew by 22.8 percent, on a like-for-like basis they increased by 11.1 percent.
However, the impact of recent “cost inflation” squeezed gross margin. In addition, there were higher expenses in the course of the rapid expansion of space and various one-off charges. Reported net profit fell by 14.7 percent to EUR 81 million compared to the first half of the previous year.
In the first months of the second half of the year, the group felt the effects of the current “difficult general conditions”. The company conceded that the effects of high inflation on the purchasing behavior of customers were particularly noticeable in Central Europe and led to lower frequencies in the branches.
Despite this, management stuck to its forecasts for the full year and emphasized that an improvement in the gross margin can be expected in the course of the second half of the year. For 2022/23, it continues to expect a sales increase of a percentage in the high teens. Earnings before interest, taxes, depreciation and amortization (EBITDA) are expected to grow by a mid-teens percentage on a currency-adjusted basis. The group also stuck to its goal of expanding its branch network by at least 550 locations in the current year. The retailer explained that the number of stores had already increased by 166 in the first half of the year.