Poundland could be sold as it faces tough trading environment

The firm said Pepco makes the “vast majority” of group earnings and the group wants to “further build on that strong base ultimately as a single pan-European format”.

It came as Pepco warned over annual earnings at Poundland amid “more difficult” trading conditions and as costs surge.

Underlying earnings will come in at between 50 million euros and 70 million euros (£41.9 million and £58.6 million) as sales remained in negative territory over January and February, Pepco said.

Pepco said: “Poundland is a strong brand that serves millions of customers every week and had around two billion euros (£1.67 billion) in annual turnover in financial year 2024, but it is also operating in an increasingly challenging UK retail landscape that is only intensifying.

“From April 2025, the UK Government’s additional tax changes announced in the Budget will also add further pressure to Poundland’s cost base.

“Therefore the board is actively evaluating all strategic options to separate Poundland from group during financial year 2025, including a potential sale.”

Retailers have been among the hardest hit by incoming measures announced in last October’s Budget to increase national insurance contributions, on top of another hike in the minimum wage.

Pepco will also look at options to offload the Dealz business in Poland further down the line, but will continue to manage the chain for now, while it confirmed it is reviewing its Pepco chain in Germany.

As part of the plans, Pepco said former Poundland managing director Barry Williams, who took over as managing director of Pepco in September 2023, will return to his former role at Poundland ahead of a possible sale.