Pepco Group (PCO) H1 2025 earnings summary

Executive summary

• H1 EBITDA grew 11% year-over-year, outpacing sales growth, with trading momentum continuing into Q3.

• Board is progressing with Poundland separation, targeting completion by end of FY25.

• Pepco and Dealz delivered strong growth and margin expansion, while Poundland faced significant decline and impairment.

• Group revenue rose 4.3% year-over-year to €3,338m, driven by Pepco (+9.3%) and Dealz (+13.8%), offset by Poundland's 6.5% decline.

• Net debt improved by €150 million to €279 million, leverage at 0.6x.

Financial highlights

• Group revenue up 4.3% to €3,338m in H1, with strong volume growth in Pepco and Dealz.

• Group gross margin improved 30bps to 43.3%, led by Pepco (+180bps) and Dealz (+150bps), offsetting Poundland's 430bps drop.

• Underlying EBITDA (IFRS 16) declined 5.5% to €460m, mainly due to Poundland; excluding Poundland, EBITDA up 9.5%.

• Underlying PBT down 32.8% to €117m; underlying EPS fell 44.3% to 12.7 cents.

• Free cash flow outflow of €7m, with capex reduced to €53m (1.6% of revenue).

Outlook and guidance

• FY25 guidance for Pepco and Dealz maintained: high single-digit revenue and EBITDA growth, gross margin flat year-over-year.

• Poundland FY25 EBITDA outlook revised down to €0–20m, with EBIT loss of €120m–€140m.

• Targeting ~250 net new store openings in FY25, mainly Pepco in CEE.

• Medium-term ambitions: ≥7% revenue CAGR, ≥9% EBITDA CAGR, gross margin ~48%, >€200m free cash flow, 250 net new stores per year.