Poundland: Retailer continues to face extra costs from Red Sea disruption

The parent firm of Poundland has said it is continuing to witness extra freight charges and delays due to disruption in the Middle East.

However, Pepco Group, which runs the 864-store discounter in the UK, said it is managing product availability and does not expect any issues to have an impact on profits.

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The retailer is among firms to have been affected by ships being re-routed away from the Red Sea and around the Cape of Good Hope following attacks by the rebel Houthi group, which has been locked in a decade-long civil war in Yemen.

It came as Pepco revealed a dip in like-for-like sales for the past quarter and the appointment of a new boss.

The parent firm of Poundland has said it is continuing to witness extra freight charges and delays due to disruption in the Middle East.  (Photo by Dominic Lipinski/PA Wire)The parent firm of Poundland has said it is continuing to witness extra freight charges and delays due to disruption in the Middle East.  (Photo by Dominic Lipinski/PA Wire)
The parent firm of Poundland has said it is continuing to witness extra freight charges and delays due to disruption in the Middle East. (Photo by Dominic Lipinski/PA Wire)

On Thursday, Pepco reported that like-for-like revenues dipped by 2.9 per cent over the three-months to March 31.

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However, total revenues were up 11.7 per cent on a constant currency basis to 1.35 billion euros (£1.16bn), after being boosted by store openings.

Poundland reported a 2.8 per cent drop in like-for-like sales, with overall revenues up 4.5 per cent to 458m euros.

The company added that Poundland was impacted by a change in its general merchandise and clothing ranges to use Pepco products over the past half-year, but stressed that this transition is “largely behind us”.

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Andy Bond, executive chairman of Pepco Group, said: “While the trading environment remains challenging, we are encouraged by signs of an improved performance in some of our core Pepco Central and Eastern Europe markets – a key geographical region for the group – during the second quarter.

“We expect a continued upward trajectory in like-for-like sales at Pepco in H2.”

Pepco also said it has appointed Stephan Borchert to become its next chief executive from July 1.

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Mr Borchert was most recently the boss of Vision Express owner GrandVision until 2022, and previously president of Sephora’s European business.

Mr Bond said: “On behalf of the board, it is great to welcome Stephan, who brings a wealth of experience and a results-driven track record in retail and international business operations.

"I look forward to working with Stephan to deliver our renewed strategy to improve profitability and cash generation in our core established business, while delivering more measured profitable growth.”

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Mr Borchert said: “I’m honoured to be the next chief executive of Pepco Group – which has the opportunity to become Europe’s leading variety discount retailer.

"Pepco Group is a powerhouse retail business with a strong reputation for delivering incredible range, value and convenience for customers.

"I am delighted to work alongside the leadership team to deliver on the group’s strategic priorities as Pepco Group enters the next phase of its growth journey.”

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Pepco Group was established in 2015 and comprises two independent value retailers – Pepco and Poundland, which also trades internationally under the Dealz brand, together with a global sourcing arm, PGS, which works with both operating companies.

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