Poundland owner Pepco has revealed a sales slump over the latest quarter, partly driven by delays in summer stock reaching its stores due to Red Sea shipping disruption.
The retail group, which also runs the Pepco and Dealz brands across Europe, is among retailers that have been hampered by volatility in the region, with many shipping firms having to redirect cargo around the foot of Africa following attacks by Houthi rebels.
It said this contributed to a delay in “summer stock hitting store shelves” in the quarter to June 30.
The company added: “The group remains confident that availability issues that have impacted LFL sales will ease through the fourth quarter, as we mitigate the Red Sea impact by shipping product earlier and channelling stock through different shipping routes.”
It came as Pepco reported that group like-for-like sales dropped by 4.3% over the quarter.
The sales slump was even greater across its Poundland stores, which reported a 6.9% drop in like-for-like sales.
The company said this was largely due to challenges linked to the launch of new clothing and general merchandise ranges from its Pepco business, which are “being addressed”.
Nevertheless, overall group revenues were up 8% year-on-year to 1.48 billion euros (£1.25 billion) as it was buoyed by a raft of new store openings.
Andy Bond, executive chair of Pepco Group, said: “We have continued to execute against our strategy to deliver more measured growth – doing less, to achieve more – with a greater focus on improving profitability.
“Group like-for-like revenues in Q3 were below our expectations, partly due to macro factors, such as ongoing supply chain disruption, and company-specific issues, including slower-selling older stock which is being removed through markdown, as well as the transition to Pepco-sourced clothing and general merchandise in Poundland and Dealz.
“We are actively improving the availability and breadth of our ranges, and expect to benefit from these actions in the new financial year.”
Pepco held its previous earnings guidance for the year, indicating that it will report a 20% rise in earnings before interest, tax, depreciation and amortisation (ebitda) to around 900 million euros (£759 million) for the current financial year.
