Pep & Co suffered a pre-tax loss in its first 15 months of trading after ploughing investment into its rapid store opening programme.
The value fashion chain, which opened 50 stores in 50 days when it launched on British high streets in the summer of 2015, booked a pre-tax loss of £18.9m in the period to September 24, 2016.
According to documents filed at Companies House by parent company Pepkor UK Retail, Pep & Co raked in £29.1m in sales during its first 15 months in operation.
It made a gross profit before operating expenses of £7.9m.
But £22.3m of administrative expenses pushed the retailer into the red.
Cost of future growth
A Pep & Co spokesman said the costs reflected “the investment required to establish a business from scratch that’s well positioned for future growth”.
He added: “We worked hard to overcome the operational issues we experienced in the first six months of trading, which gives us the confidence to press on with expansion.”
Since making a splash with its standalone store opening programme, Pep & Co has hit the accelerator on plans to open concessions in stores operated by sister retailer Poundland, also owned by Steinhoff.
The South African conglomerate acquired the value chain for £597m in June last year.
According to its filing, Pepkor UK, which is a subsidiary of Steinhoff, said it had 50 head office employees and 442 shop workers as of last September.
Shift in consumer behaviour
Pepkor UK chief financial officer Mark Jackson said: “We are capitalising on the permanent shift in consumer behaviour towards shopping at price-led retailers, in smaller high street locations, by offering simple discount-style pricing.
“Our principal target customer is a British mum on a budget.”
By the autumn, Pep & Co aims to have its full range available in 170 locations, comprising both standalone stores and shop-in-shops within Poundland stores.
An edited range will be available in a further 570 Poundland shops.