Pepco Group wants to open around 500-600 Pepco stores in CEE by the end of 2027 (interview)

"Our strategic decision to focus on the Pepco brand is not a surprise, we signaled such a move earlier. We want to withdraw from FMCG to create a simpler business with higher margins," CEO Stephan Borchert told PAP Biznes.

"We are planning around 500-600 new shops under the Pepco brand in the CEE region by the end of the 2027 fiscal year. We believe that around 1,000 shops are an option by the time we reach full maturity in the longer term. We're running strong sales optimisation programmes," the CEO added.

Pepco Group stated that the management board is actively exploring all strategic options to spin off the Poundland brand from the group during the 2025 financial year, including its potential sale.

As reported, Poundland, which generated a turnover of around EUR 2 billion in the 2024 financial year, operates in an increasingly challenging environment for retail in the UK, and tax changes introduced by the UK government, coming into effect from April 2025, will further increase pressure on the chain's cost base.

"In terms of Poundland, we are looking at all options, including a possible sale. This is a top priority for us. We want to complete it in the fiscal year 2025, but I can't give more details at the moment. We're well advanced in getting the adequate advisors and support for this process," Stephan Borchert said.

"We are also planning a number of activities for Poundland in the short term to help improve current performance. These are mainly activities on the commercial side. We've made a lot of mistakes in the past by adding categories of goods that were not well received by customers in the UK," the CEO added.

The group will consider the option of divesting Dealz Poland in the medium term.

"Dealz is doing very well, it's recording growth, including at LFL level. The brand is increasingly self-sustaining and does not require additional financing or special supervision by the group's management. However, it is not fully aligned with our core strategy," Borchert said.

"We are not under time pressure with regard to the Dealz decision, we are calmly evaluating and building Dealz values before we finally decide to divest. This network is basically self-funding, it doesn't require a lot of cash from the group. We are looking at the right options. I am convinced that it will be a very attractive asset to buy," he added.

Pepco Group is a chain of discount department stores, owner of the Pepco and Dealz brands in Europe and Poundland in the UK.

At the end of December, Pepco Group had 5,011 shops, including 3,845 Pepco brand stores, 825 Poundland stores and 341 Dealz stores.

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