Pan-European value retailer Pepco hailed its rising sales in a pre-close trading update for (almost) its full year, but despite its optimism, comparable sales were still below those of the year before.

The company, which operates the Pepco and Dealz brands in Europe and Poundland in the UK, will publish its full-year results in December. But for now it has delivered 51-week figures (for the period to 22 September) with group revenues 10% higher on a reported basis driven by store expansion. Yet like-for-like (LFL) revenues over the same period were down 3.1%.

While LFL revenues for the group lagged the previous year’s performance, it said that at the Pepco chain they saw “progressive quarterly improvement through the year”.

But trading in Poundland and Dealz has “largely followed the trends described in previous updates, with performance affected by the transition to Pepco-sourced clothing and general merchandise, which is being addressed, and initial benefits are expected to come in FY25”.

It’s easy to see why the uplift to sales that new stores have provided has been so big. In Q4 alone it opened 64 net new stores and expects to finish the year with 390 more locations than 12 months earlier.

Pepco said it has continued to be impacted by supply chain issues, “affecting the consistent and timely availability of stock in stores”. Mitigating actions, which include shipping product earlier, optimising shipping routes and selectively using faster carrier options, are expected to improve availability during H1 of the new financial year that’s about to start.

The group expects to report record revenues for the just-finishing full year in excess of €6 billion and it has continued to benefit from strong year-on-year improvements in gross margin, driven by the Pepco chain, as seen in the first half.  

It should deliver FY24 underlying EBITDA (IFRS 16) of at least €900 million, up around 20% on the year.

Executive chair Andy Bond said of all this: “I am pleased with the positive progress we have made this year, particularly in rebuilding profitability in our core Pepco business in Central and Eastern Europe, with further opportunities for continued improvement. Group like-for-like revenues in the fourth quarter remained lower than the prior year, partly related to ongoing supply chain disruption, nevertheless, we expect to deliver record revenue and underlying EBITDA in FY24, driven by significant improvements in gross margin year-on-year.

“While there is much more to do, particularly around like-for-like sales progress, we remain committed to expanding our price leadership position, enhancing the core customer proposition and improving our supply chain capabilities. With these foundations, as well as a focus on disciplined capex to drive free cash generation, we expect to deliver further strategic progress in FY25.”