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Pandemic raises Poundland owner Pepco's growth confidence

·2-min read
FILE PHOTO: A sign is seen in a Poundland store in London

By James Davey

LONDON (Reuters) -The COVID-19 pandemic has increased Pepco Group's confidence about its future growth prospects, its boss said on Thursday after the owner of British discount retailer Poundland reported a 16.8% rise in first-half core earnings.

The group, which listed on the Warsaw stock market last month with a 5 billion euros ($5.97 billion) valuation, also owns the PEPCO and Dealz brands in Europe.

It trades from more than 3,200 stores across 16 countries and is led by Chief Executive Andy Bond, a former boss of British supermarket group Asda.

"Whilst I would never wish for COVID, if anything the pandemic has given us increased confidence around the future," he told Reuters.

"Post a flurry of certain elements of society spending their savings that they've accumulated, post pandemic almost certainly there will be some form of belt tightening from most people and therefore discounting will have another surge," he told Reuters.

He said the last 30 years had shown discounting thrived following any economic crisis.

During the pandemic, he said Pepco had strengthened its business, particularly in terms of working capital and cost efficiencies, and would benefit from any lack of expansion or retrenchment by mid-market competitors hit hard by the crisis.

The group made underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of 324 million euros ($387 million) in its first half to March 31.

Total revenue on a constant currency basis rose 9%, driven by 225 net store openings across all its retail brands and territories.

Pepco said despite the short-term challenges that renewed cost inflation would likely bring, underlying trading remained in line with full-year guidance provided with the IPO.

The group's shares were priced at 40 zlotys at the IPO. They were trading at over 47 zlotys on Thursday.

The group has historically not traded online but Poundland has launched a trial in central England to understand customer demand.

"A basket size of 6 or 7 pounds, which is our standard store basket, will not work online. But if there's a shopper out there that wants to buy 50 pounds ($69.87) worth of Poundland products and pay for delivery then that will probably work economically," Bond said.

($1 = 0.8370 euros)

($1 = 0.7157 pounds)

(Reporting by James Davey; editing by Barbara Lewis)

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