Pepco Group expects to improve its gross margin in the 2024 financial year (started 1 October 2023) from the 40.1% level achieved last year, and plans to open more than 400 shops in the new financial year, the company said.
Gross margin at 40.1% for the full year, with this expected to increase in FY2024 as inflation on the manufacturing cost side decreases, the company stated.
“Looking ahead to 2024, I would like to note that despite the expected continuation of short-term sales challenges across the industry, we look to the coming year with cautious optimism due to recently published data indicating an expected easing of some sources of pressure on household budgets, particularly in Central and Eastern Europe. We also expect gross margins to improve over the course of the year and are even now seeing encouraging signs in this regard,” said Pepco Group executive chairman Andy Bond.
Bond highlighted that the Group boasts a market-leading customer proposition, a strong balance sheet and a turbulence-proof operating cash flow structure, providing a solid foundation for its future operations.
“Business opportunities in our core markets remain strong and we intend to exploit these in a more targeted manner, placing greater emphasis on capital, earnings and free cash flow, thereby growing our business in line with our renewed strategy,” added the executive chairman.
Pepco Group said, “that gross profit margin was challenging as it fell 0.7 percentage points year-on-year to 40.1%, impacting profitability during the year.”
“As a result of our relatively long purchasing cycle for our apparel and general merchandise range, product sales throughout FY2023 continued to be impacted by high freight and raw material prices, products were purchased several months ago when input material costs were at historic peaks. In addition, unfavourable year-on-year hedging rates were only partially offset by the price change. This was due to the strategic decision to maintain price leadership on core price items at Pepco, a factor that our customers appreciate in the current difficult times,” the company further stated.
The company said that the new financial year is expected to see “at least 400 net new shop openings across all formats in the 2024 financial year – the largest number of which will be in the Pepco chain”.
The total number of shops at the end of the 2023 financial year was 4,629, an increase of 668 net new shops, an increase of 16.9% year-on-year, predominantly driven by growth within the Pepco chain.
The Pepco Group was established in 2015 and consists of the Pepco, Dealz and Poundland retail chains. The company debuted on the WSE in 2021; it is included in the WIG20 index.
Source: Pepco Group and ISBnews
