Poundland owner explores 'all options' for potential sale of chain

At it's Capital Markets Day investor event today, Chief Executive Officer Stephan Borchert said the group was exploring "actively exploring separation options" for Poundland - previously described as one of the Midlands biggest business success stories.

The company said its efforts to integrate Poundland into it's wider Pepco brand had failed, adding that it had become clear over the last 12 months that the plan had not delivered for either customers or shareholders.

The group says its in-house Pepco label accounts for the "vast majority" of its earnings, with the potential spin-off part of efforts to drive profitability at the firm.

"The Board and I are actively exploring separation options for Poundland, including a potential sale, from the Group, with consideration also given to the separation of the well-performing Dealz Poland over the medium term," he said.

“We are taking clear strategic action to focus on the Pepco brand as our single future format, to move away from FMCG and create a simpler business focused on higher margin clothing and general merchandise.

"Pepco will continue to be the engine of the Group’s earnings potential, and its strong customer offer and price leadership give it a compelling ‘white space’ opportunity to drive further profitable growth in its Central and Eastern European heartland, as well as select markets in Western Europe."

It came as Pepco warned over annual earnings at Poundland amid “more difficult” trading conditions and as costs surge.

Earlier this year the Willenhall-based brand reported poor festive trading, who saw sales plummet by 9.3% for the three months to December 31, with like-for-like sales down 7.3%, blaming weaker clothing and general merchandise sales. 

Underlying earnings will come in at between 50 million euros and 70 million euros (£41.9 million and £58.6 million) as sales remained in negative territory over January and February, Pepco said.

“Our latest trading period – with continued positive Pepco like-for-like sales – reflects the brand’s momentum and underpins our focus on the business that accounts for the vast majority of the Group’s earnings and our highest returns on capital," added Mr Borchert.

"In addition, the authorisation of a share buyback capability of up to €200m, which the Board can make use of from time to time, reflects the confidence over the strong current and future cash generation of the Group, and desire to drive shareholder returns.”