Poland: Pepco is betting on a large-scale expansion of its stores

Discount Variety Retail Chain Pepco Group (listed on WSE: PCO) is pushing for a rapid expansion of its network of stores and strict cost control to support its results, its CEO said after the company reported growth in its quarterly revenue, Reuters reports. The owner of the discounters PEPCO and Dealz reported a 12% increase in its total quarterly revenue in constant currencies and a 0.7% increase in sales revenue. After the announcement of the results, the share price fell by 3.8% to 42.58 zlotys ($ 10.77) per share, close to the price from the initial public offering and to a historic low. The reason for this decline is concerns about consumer demand and interruptions in supply chains, said mBank BM analyst Janusz Pieta.

Pepco Group said that after dealing with its most important trading quarter, it is confident that it will achieve profit growth to historic levels. Despite the growing focus of retailers on online commerce, the group is committed to expanding its physical stores and sticking to current prices, despite accelerating inflation, in an effort to attract customers and gain more market share. "Simple math shows that many other things our customers spend money on have become more expensive. From this point of view, I think it is especially illogical to raise prices, because people have less money to spend with us, instead of more, "said Andy Bond. Bond, who is stepping down at the end of March for health reasons, notes that such an approach requires cost discipline, citing distribution, store management and supply chain efficiency as areas that can be saved.

Pepco Group reported a record quarter in terms of opening new stores 161, 146 of which are under the PEPCO brand. Many of these outlets are located in strategically important markets in Western Europe such as Italy, Austria and Spain.

"We expect to open more stores this year than the market expects," Bond said. "I would not like to give an exact number, but it will certainly be significantly more than 400." The group, which was listed on the Warsaw Stock Exchange in May, said its revenue for October-December reached 1.35 billion euros (US$ 1.62Bn).


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