European discounter Pepco Group said on Thursday the performance of its struggling Poundland business in the UK deteriorated in the Christmas quarter, with underlying revenue falling 7.3%.
The Warsaw-listed retailer – which also owns the Pepco and Dealz brands – said group like-for-like revenue fell 1.1% in the three months to 31 December, its fiscal first quarter, narrowing from 3.5% in the previous quarter.
Like-for-like revenue rose 1.4% at the Pepco fascia and 6.6% at Dealz.
The group said weakness in the clothing and general merchandise segment were largley the cause of Poundland’s decline.
Previously flagged challenging market conditions also contributed to the decline.
Pepco said last month it was considering strategic options for the 825-store chain after it booked a €775 million impairment charge, plunging the group into an annual net loss of €662 million.
It said the charge reflected Poundland’s weaker performance in its 2023/24 year, along with slower growth prospects, increased competition and a higher cost outlook in the UK following the new Labour government’s tax-raising budget in October.
'Taking Immediate Measures'
Group CEO Stephen Borchert said, “Getting Poundland back on track is a key priority – we are undertaking a comprehensive assessment of the business and taking immediate measures on improving our cash performance and strengthening the customer proposition.”
He said Poundland would not open any net new stores during the year.
In the UK, major retailers – including Tesco and Marks & Spencer – have reported decent Christmas trading by all have flagged concerns about rising costs, the strength of the economy and the consumer in 2025.
Borchert said he was pleased with the momentum of the Pepco and Dealz businesses.
The group – whose shares have fallen 30% over the las year – said total revenue in the quarter was €1.93 billion, a rise of 3.1% on a constant currency basis that reflected the opening of 63 net new stores taking the total to 5,011.
Group gross margin improved over 140 basis points.
Borchert plans to say more on strategy at a Capital Markets Day on 6 March.
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