| 12°C Belfast

Coronavirus ends winning run for Poundland owner Pepco

Pre-tax profit dropped 16% in the first six months of the financial year.

Close

Almost all of the chain’s stores have now reopened (Mike Egerton/PA)

Almost all of the chain’s stores have now reopened (Mike Egerton/PA)

Almost all of the chain’s stores have now reopened (Mike Egerton/PA)

Poundland owner Pepco registered a sharp drop in profit when the coronavirus outbreak hit, wiping out what could have been a strong start to the financial year.

Almost all of the company’s 2,844 stores have now reopened, with only 1% remaining closed, but the effect of Covid-19 had already taken a significant chunk out of the business.

In the first six months of the financial year, pre-tax profit dropped by 16% to 89 million euro (£81 million).

But if the cut-off point had only been a month earlier, Pepco’s results could have been very different.

In the five months to February, before the pandemic seriously affected its main markets, profit rose nearly 22% to 116 million euro (£105 million).

Chief executive Andy Bond said: “It is pleasing to report continued strong operational, strategic and financial progress made by all parts of the Pepco Group before the impact of Covid.”

Mr Bond told the PA news agency that the crisis has “fundamentally changed what we sell in our shops”.

It is likely that consumer demand for discount retailing will increase in a period of prolonged economic uncertainty, and we are extremely well placed to take advantage of this trendAndy Bond, Pepco Group

He said: “People are buying much more stuff for the home during lockdown, so we are selling a lot more products to help with home-schooling, as well as DIY and gardening items.

“But we’ve reduced the amount of drinks we sell, for example, as people aren’t coming for a small bottle of drink in the same way as they did before.”

He added that the crisis could benefit the firm, as people in financial difficulty looked to discount retailers to do their shopping.

“Looking forward, the consumer outlook remains uncertain and our plans reflect our expectation of a ‘new normal’ trading environment once we all emerge from the Covid virus,” he said.

“However, it is likely that consumer demand for discount retailing will increase in a period of prolonged economic uncertainty, and we are extremely well placed to take advantage of this trend.

“We remain confident that we have the vision, the strategy and the business model to continue to deliver attractive long-term sales and profit growth.”

Even though Poundland itself was classed as an essential store in the UK and allowed to keep trading, the company temporarily shut 130 of its more than 800 sites.

Sales were also down around 40% at the stores that did stay open.

Just 856 of the Pepco-branded stores, which are big in eastern Europe, were open – around 44% of the total – and sales dropped to around 15% of their usual levels for a time.

Last year, Pepco’s troubled South African owner, Steinhoff, said it was considering “strategic options” for the discount group, which were understood to include a potential stock market float or sale.

PA