Undeterred by COVID-19 Poundland owner pushes on with European expansion

By James Davey

LONDON (Reuters) - Pepco Group, which owns British discount retailer Poundland, said on Wednesday it planned to open hundreds of stores across Europe this year despite its sales being dented by the COVID-19 pandemic.

The group, which also owns the PEPCO and Dealz brands in Europe, said same-store sales fell 2.1% in its Christmas quarter as a result of closures related to the virus but it was still planning to expand in 2021.

The company, which does not trade online, ended its first quarter to end-December with 3,218 stores, having opened a net 87 new PEPCO stores and 18 Dealz stores.

In 2021 it plans to open over 200 more PEPCO stores, over 50 more Dealz stores and over 20 Poundland stores.

"There aren’t many businesses that will have the confidence to invest at the rate we will invest to grow," CEO Andy Bond told Reuters.

"We will open over 400 shops across Europe this year (2020-21). I don’t know of any other retailer that will do that," he said.

Bond, a former boss of supermarket group Asda, said the group was well positioned for an economic rebound as the pandemic recedes.

"The fact that customers will if anything be seeking even greater value in the coming years means that we feel very good about our business and if anything ironically feel better about it now than 12 months ago," he said.

Pepco Group is part of South African conglomerate Steinhoff, which is still battling the fallout of a 2017 accounting scandal.

Since 2019 Steinhoff has been evaluating a range of strategic options for Pepco Group, including a potential public listing, private equity sale or trade sale.

That process was delayed by the pandemic, but Steinhoff said on Monday it had resumed.

"Steinhoff will start looking at options again. It's too early to say where that will go," said Bond.

Pepco Group said total revenue in the first quarter was 1.19 billion euros ($1.45 billion), up 9.1% on a constant currency basis, reflecting new store openings.

It said trading stores, those that were open for the full duration of any week in the quarter, delivered like-for-like sales growth of 5.5%.

(Reporting by James Davey; editing by Alexander Smith and Jason Neely)