Monday 21 October 2019

Poundland owner rebrands as it leaves door open for float or sale

Pepkor Europe has rebranded to Pepco amid speculation the company could be sold or floated as parent firm Steinhoff looks to generate funds.

Poundland owner Pepco has rebranded amid speculation over a stock market float or sale (Pepco/PA)
Poundland owner Pepco has rebranded amid speculation over a stock market float or sale (Pepco/PA)

By Henry Saker-Clark, PA City Reporter

The owner of Poundland has kept open the possibility of a flotation or sale as it moves to become entirely independent from crisis-stricken parent company Steinhoff.

Pepco, which announced its rebrand from Pepkor Europe on Friday morning, said the new title was “nothing to do” with immediate float plans, but admitted its future was in the hands of the South African firm.

Andy Bond, chief executive of Pepco, said “who knows what will happen” regarding a future sale or IPO, but said the firm had completed paying off debts to Steinhoff to become financially independent from the retail giant.

Mr Bond added that Poundland has faced difficulties with some UK suppliers over securing credit insurance due to its relationship with Steinhoff.

We feel there is a huge amount of growth potential in our existing markets, as we have seen that continued demand for discount options across the board Andy Bond, Pepco chief executive

Steinhoff, Pepco’s majority shareholder, has said it needs to offload “some of its assets” as part of its recovery from a 6.3 billion euro accounting scandal which rocked the company in 2017.

Steinhoff, which also owns UK furniture retailer Bensons for Beds, bought Poundland for £610 million in 2016 and combined the retailer with its European discount business Pepkor Europe.

The group has now rebranded to Pepco, the name of one of its European retailers, as it seeks to become Europe’s largest cross-category discounter.

Pepco said it expects group earnings before tax and income to have jumped 18% in the year to September 30.

It added that Poundland was profitable during the year but would seek to reduce costs through rent negotiations.

Nick Wharton, chief financial officer of Pepco, said the company is looking to reduce rents by around 25% when leases come up for renewal or end leases in order to move to larger retail premises.

Mr Wharton said the company could save up to 20 million euros (£17.8 million) through improvements on rent over the next five years.

Pepco said it could relocate some high street stores to retail park locations as it seeks bigger units where it can have larger ranges of clothing available.

The company added that it expects the number of Poundland stores to remain “largely flat” over the next five years, with the vast majority of its expansion plans coming from central and eastern Europe.

It expects to open 300 new stores each year, it said.

Mr Bond added: “We feel there is a huge amount of growth potential in our existing markets, as we have seen that continued demand for discount options across the board.

“We have particularly seen great growth in clothing and apparel, so pushing that aspect of the business is important.

“Around 80% of our business is outside of the UK, so our rebrand really highlights our position as a staunchly European retailer.”

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