Pepco Group targets accelerated growth after Poundland sale, CEO says

By Marta Maciag and Julia Kotowska

GDANSK (Reuters) -Pepco Group eyes accelerated growth in Continental Europe following the sale of Britain’s Poundland, the CEO of the Polish discount retailer said after it posted record-high third-quarter revenue on Thursday.

Investment firm Gordon Brothers bought the struggling Poundland business in June, allowing Pepco to concentrate on its higher-margin main brand that sells clothing and general merchandise mainly in Central and Eastern Europe.

Pepco had been weighing its options for the 800-store British discount retailer since December to offload a significant drag on its overall profitability.

“The group is much simpler now after the sale of Poundland, and we’ll focus on accelerating growth and profit,” CEO Stephan Borchert told Reuters.

The Warsaw-listed company’s revenue rose 7.7% at constant currency to 1.1 billion euros ($1.3 billion) in the third quarter through June, as growth in the Pepco and Dealz brands drove a 2.6% rise in like-for-like sales.

Its shares were up 1.4% as of 0811 GMT, after rising as much as 5.7% earlier in the session.

Pepco opened 45 new stores in the quarter and reaffirmed its guidance for 250 openings this year.

“We will still focus on store openings in Central Eastern Europe because we believe we have still a lot of potential here,” Borchert said.

He added the company also saw progress in Italy, Spain and Portugal as its next growth frontier.

Competition in the sector is fierce, particularly in Poland, Borchert said.

“We have a big task force here to focus on strengthening our Polish market … But we strongly believe in our customer value proposition.”

Pepco competes at home with discount chain Action and LPP’s Sinsay that sells clothes and home goods.

Pepco also said it would launch a buyback programme of up to 50 million euros on or around July 17, aimed at reducing its capital and meeting obligations under staff incentive plans.

The company decided it was the right time for a repurchase as the current share price undervalues its future prospects, Borchert said.

($1 = 0.8524 euros)

(Reporting by Marta Maciag and Julia Kotowska; editing by Milla Nissi-Prussak)

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