Pepco, the parent company of Poundland, has announced its intention to “realign” its struggling Central and Eastern Europe division as part of a management reorganization, which comes on the heels of its second profit warning in just over two weeks.
The company attributed the profit warning to “unseasonably warm weather” in its primary markets, leading to reduced demand for clothing in countries such as Poland and the Czech Republic, resulting in a year-on-year decline in sales. Additionally, the company has not yet benefited from the slowdown in inflation, as it is still selling items that were purchased earlier in the year at higher costs.
Interestingly, the Poundland segment of the business performed better, achieving record quarterly sales in the three months leading up to June 30.
Despite the positive performance in the UK, Pepco initiated a review to refocus its attention on reviving its “core” Central and Eastern Europe business, launching a strategic review to realign its efforts in that region. As part of this restructuring, the management team was reshuffled, placing Barry Williams, the head of Poundland, in charge of the Pepco brand based in Central and Eastern Europe. The previous Pepco leader, Anand Patel, left his position immediately.
Andy Bond, the executive chair who assumed executive responsibilities following Trevor Masters’ departure earlier this month, expressed confidence in the company’s potential to become Europe’s leading variety discount retailer, offering excellent value to consumers in various product categories, including FMCG, clothing, and general merchandise. However, he emphasized the need to refocus on delivering for customers in their core business while pursuing more measured growth.
Bond stated, “We need to enhance profitability and cash generation in our established business while implementing a more targeted growth plan in markets where we already have a presence.”
Highlighting the significance of the UK as a growth area for Pepco, Poundland recently agreed to acquire 71 stores from the defunct competitor Wilko. These acquired stores will be rebranded as Poundlands.
