Pepco ‘actively exploring’ Poundland sale as UK retail pressures mount
Pepco Group is actively exploring a potential sale of Poundland as it moves towards a simpler business model
Pepco Group is ‘actively exploring’ a potential sale of Poundland as it moves towards a simpler business model focused on its higher-margin Pepco brand.
The discount retail group, which owns Pepco and Dealz in Europe and Poundland in the UK, outlined its strategic vision at its Capital Markets Day investor presentation in London today.
CEO Stephan Borchert said the group is prioritising its Pepco format as the “single future format” for the business, with plans to divest from fast-moving consumer goods (FMCG) and streamline operations.
As part of this shift, the company is assessing “all strategic options” to separate Poundland from the group in the 2025 financial year, including a potential sale.
The move comes after a difficult trading period for Poundland, which has struggled amid an increasingly competitive UK retail market.
-
Related Story
-
Its performance has dragged on Pepco Group’s overall results in recent months. In its latest trading update, the company reported that Poundland’s like-for-like sales continued to decline, following a 7.3% drop in the final quarter of 2024.
The group attributed these challenges to the underperformance of clothing and general merchandise, particularly following the transition to Pepco-sourced products.
Despite Poundland generating approximately €2bn in annual turnover last year, Pepco Group acknowledged that the UK retail market remains “increasingly challenging,” with additional tax changes set to impact Poundland’s cost base from April 2025.
Borchert said: “The Board and I are actively exploring separation options for Poundland, including a potential sale, from the Group, with consideration also given to the separation of the well-performing Dealz Poland over the medium term.
“Barry Williams did a great job as Managing Director of Pepco, returning it to like-for-like sales growth, and I am confident he will play a pivotal role in getting Poundland back on track, given his previous success there.”
While Poundland faces an uncertain future, Pepco continues to be the primary driver of earnings for the group. Pepco’s like-for-like sales grew in the latest trading period, with double-digit volume growth and improved stock availability across its stores.
The group sees “significant white space” for expansion, particularly in Central and Eastern Europe, as well as select Western European markets such as Spain and Italy.
Looking ahead, the company remains confident in Pepco Group’s ability to drive profitable growth, with the brand expected to deliver high single-digit EBITDA growth for FY25.
However, it warned that trading conditions remain tough for its British discounter, forecasting underlying EBITDA for the UK chain to be between €50m and €70m (£43m-£60m) for the year, down sharply from €138m (£118m) in the previous financial year.
Click here to sign up to Retail Gazette‘s free daily email newsletter
