Steinhoff's European discount retail group, Pepco, reported an increase in sales in the first half of its 2023 year as customers flocked to its cheaper offering, as high inflation and interest-rate hikes squeezed consumers’ disposable income.
The revenue of the group, which owns Pepco and Dealz brands in Europe and Poundland in the UK, rose 22.8% year on year on a constant currency basis to €2.84bn in the six months to end-March.
This was driven by Pepco’s growth of 36.9% and the group adding 166 net new more stores as it looks to open 550 net new stores in its financial year.
Like-for-like sales were up 8.5% year on year, with Pepco advancing 10.7% and the Poundland Group 5.7%.
Pepco Group CEO Trevor Masters is pleased with the performance against the backdrop of high inflation worldwide resulting in central banks hiking interest rates. He believes the double-digit growth in like-for-like revenue demonstrates the strong demand for its products.
The group previously said it has benefitted from new customers in Poland as refugees fled the war in Ukraine.
The company added that the macro environment it faces is “more balanced now than in the past 18 months with product input costs starting to ease, though headwinds remain on other costs, including energy”.
Steinhoff owns 79% of the company, which has its biggest footprint in Poland, generates about half of Steinhoff’s revenue from continuing operations.
As the group continued to open more stores, the number of net new stores opened in Western Europe surpassed the ones in Central Europe for the first time. This included the 100th store in Italy during the reporting period and the 100th one in Serbia subsequently.
“Our expansion in Western Europe is progressing well. Italy and Spain continue to be our fastest-growing Western Europe territories, having delivered strong results over the last three years,” the company said.
The group has opened 235 net new stores so far in its 2023 financial year, including 134 Pepco, 32 Poundland and 36 Dealz stores.
It plans to launch Pepco in Portugal and Bosnia and Herzegovina later in 2023.
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