Pepco Group’s profit drops by 16.3% in the first half as COVID-19 weighs on sales

Pepco Group said on Tuesday that its profit in the first half (H1) of the current financial year saw a 16.3% decline to £80.05 million. The owner of the discount retailer Poundland attributed the decline to the Coronavirus pandemic that it said weighed heavily on its sales in recent months. Learn more about profit and loss statements.

The British company is also the current owner of prominent European brands like Dealz and PEPCO. It is a subsidiary of a struggling South African conglomerate, Steinhoff. In February, Advent International partnered with two equity firms to takeover Pepco Group for £3.8 billion.

In terms of profit before tax, Pepco printed £105 million that translates to a 21.8% increase as compared to the previous year. The group also said that its balance sheet was strong with £433 million of net debt.

Pepco reports a 9.7% increase in H1 revenue

According to Pepco, its revenue came in 9.7% higher in the first half of the financial year, that ended in March. In the five months that ended in February, on the other hand, its revenue was reported about 14.4% up.

Pepco currently operates 2,844 stores in total. As 99% of its stores have resumed operations after months of pause due to COVID-19, it highlighted that its revenue has already recovered to pre-virus levels. In terms of like-for-like sales, however, the company is still struggling to pull out of the negative territory.

The group also expressed confidence in its financial stature as it boasted positive cash resources worth more than £361.50 million as of 13^th June. Pepco also said on Monday that it took necessary measures to minimise its inventory commitments with forward inventory commitments posting over £271 million worth of cancellations and deferrals.

CEO Andy Bond’s comments on Tuesday

CEO Andy Bond of Pepco Group commented on its report on Tuesday and said:

“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. 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.”

In his statement earlier this year in February, Bond referred to the rising challenges for Steinhoff and said that it was almost inevitable that the South African conglomerate will eventually sell off Pepco.