Pepco has reported a growth in revenue despite facing a “challenging trading environment” in April and May across central Europe.

Store front showing Pep & Co and Poundland branding

Pepco reported a group revenue rise of 12.5% year on year

Total group revenue was up 12.5% year on year on a constant currency basis to €1.3bn (£1.1bn) in the third quarter, ending June 30.

Pepco’s revenue rose 15.3% to €831m (£711m), while Poundland’s revenue increased 8.6% to €539m (£461m).

Group revenue grew 2.6% on a like-for-like basis. Poundland’s like-for-like revenue increased by 9% but was offset by Pepco’s dip of 1.2%, which reflected a challenging environment in central Europe.

Pepco Group reported net new openings of 159 stores in the third quarter and is on track to open 550 net new stores in FY23.

The group’s EBITDA outlook for the full year remains the same assuming “no further significant deterioration in the trading environment”.

Pepco Group chief executive Trevor Masters said: “The past quarter saw the group make further strategic progress, with 159 net new stores launched as we continued to execute on our profitable store-opening programme.

“We remain confident of meeting our target of opening at least 550 new stores this financial year, with openings weighted towards the fourth quarter.

“As we highlighted at our interim results in June, the macro-economic climate continues to be challenging, particularly in central Europe, due to elevated levels of inflation.

“In addition, Pepco’s Q3 growth reflected a period where the business benefited from trading upside in the prior year driven by the influx of people from the Ukraine war into its core markets.

“Poundland Group delivered a strong trading performance in Q3, driven by consumers prioritising spend on FMCG items. Both Pepco and Poundland Group are in positive like-for-like growth at the start of Q4. 

“We remain committed to supporting our customers in this challenging environment by maintaining our market-leading pricing. 

“We continue to seek improvements in the cost of doing business and leveraging our in-house direct sourcing arm, Pepkor Global Sourcing, which is a key competitive advantage for the group.

“Our focus remains on building a bigger, better, cheaper and simpler business, and we are well positioned to deliver future success as inflationary pressures ease.”