STEINHOFF International subsidiary Pepco Group yesterday reported a double-digit growth in half-year earnings despite the impact of Covid-19 across the geographies in which it operates.
The fast-growing pan-European discount retailer reported a 16.8 percent increase in underlying earnings before interest, tax, depreciation and amortisation to €324 million (R5.5 billion) for the six months to end March, attributed to continued revenue growth, gross margin expansion and effective cost management.
However, the Pepco Group felt the impact of Covid-19 as lockdown measures and trading restrictions impacted the business across Europe, with store closures reducing consumer footfall.
Pepco, a non-essential retailer, lost 19 percent of its trading weeks during the period as result of the store closures, which included extended store closures in Poland and the Czech Republic.
The brands include Poundland, Dealz and Pepco and operates in 16 countries in Europe. However, the group managed to lift its revenue 9 percent to €2bn on a constant currency basis, supported by 225 new stores added during the period.
Its earnings per share increased 52.96 percent to 41.3 euro cents a share compared to 27 euro cents reported a year earlier. The group did not declare an interim dividend.
Chief executive Andy Bond said the group anticipated that the environment in which they operated would remain changeable and challenging in the short term, but over time as consumer behaviour returns to more normal patterns, any Covid-19 related restrictions that impact their customers' confidence to shop are further relaxed.
“However, as these results show, we have a clear and winning customer offer, a long-term growth strategy delivering stores in existing and exciting new markets, as well as a number of key initiatives to drive our sales and margin.
“As such, we remain confident about our prospects for continued profitable growth in the balance of the financial year and beyond,” Bond said.
Pepco Group listed separately on the Warsaw Stock Exchange in May to further divorce itself from its troubled parent company by valuing the company at €5bn on listing.
The group reported cash on hand of €482m at the end of the period, up from €292m compared to a year earlier and slalashed its net debt by 6.62 percent to €1.27bn, down from €1.36bn last year.
The group said all stores were now trading, although some restrictions remain, placing limitations on customer footfall. “Despite the short-term challenges that renewed cost inflation will likely bring, underlying trading remains in line with full-year guidance provided at the point of initial public offering.
Steinhoff International shares rose 0.51 percent on the JSE to close at R1.98 yesterday.
sandile.mchunu@inl.co.za
BUSINESS REPORT