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Sandra Halliday Published
May 28, 2025
Pan-European value store retailer Pepco Group saw “strong H1 profit growth with tangible strategic progress” for the six months to the end of March.
It reported record group revenue of €3.2bn, which was up a healthy 13.8% year-on-year, easily outstripping the period’s inflation rate. It also grew 11.1% at constant currency.
And the group gross margin rose 310 basis points (bps) to 43.1%, driven by the Pepco chain it operates in much of mainland Europe.
In fact, its record underlying group EBITDA (on an IFRS16 basis) rose a pleasing 28.2% to €487m, but at the Pepco chain, EBITDA was up as much as 38.9%.
Underlying pre-tax profit of €174 million was up 21.7% on the year.
The company has been helped by its ongoing ambitious store opening programme and despite “more measured store growth and disciplined capital investment”, it still managed 289 net new stores in H1. But the slowdown in its programme can be seen by the fact that only 86 were opened in Q2.
Not that everything has been going Pepco’s way. For instance, Austria is now classified as a discontinued operation following the group’s exit from the country so all the numbers exclude those ops. It had said earlier this year that it didn’t expect the Austrian market to “reach the appropriate level of returns” having debuted there in September 2025 and operating 73 Pepco stores in the country.
And while its total sales figures were very strong, driven by those new stores in other countries, like-for-like revenue declined by 2.5% during H1, although this was against a strong comparison period with H1 having seen an impressive 11.1% rise on this basis.
Like-for-like sales varied a lot among the company’s chains but none were positive with Pepco down 3.2%, Poundland down a tiny 0.7% and Dealz Poland down 4.6% in H1.
Yet despite the drop at Pepco, that chain was a big driver of the higher gross margin. The aforementioned rise to 43.1% came after a margin of 40% a year earlier with a “strong recovery in Pepco”, which was up 480 bps.
EBITDA varied across the three chains too. As mentioned, the Pepco chain saw EBITDA growth of 38.9%, but Poundland EBITDA was down 6.5% while Dealz EBITDA doubled.
Executive Chair Andy Bond hailed “a solid group performance” and said that the “standout performer was Pepco’s Central and Eastern European business, the key engine driver for the group”.
He said the firm has “successfully rebuilt gross margin and store profitability in this region back towards pre-pandemic levels with further opportunities for improvement. This achievement underscores Pepco’s continuing and compelling customer offer across apparel and general merchandise at market-leading prices”.
Yet he added that “despite a positive FMCG contribution, Poundland’s performance was behind expectations due to challenges in implementing the significant range change to Pepco products, which we are addressing. Dealz Poland continued to make progress”.
But he’s upbeat for the business overall and said that “while consumer sentiment in some of our key markets remains challenging”, the firm expects underlying EBITDA to continue rising strongly.
It expects to deliver underlying full-year FY24 EBITDA (IFRS 16) of around €900 million, up from €753 million.