The owner of budget retailer Poundland has warned that the mounting cost of living crisis in the UK was forcing shoppers to cut back on essentials.
Pepco Group, which owns Poundland in the UK, Dealz in Ireland and the Pepco chain in mainland Europe, said western European markets were all battling a spike in inflation alongside stagnant wage growth, leading to lower spending.
But in the UK specifically, it said the cost of living crisis had dented disposable income so much that customers were now scaling back on even essential purchases in the short term.
The update came as the group, which has a total of 3,696 stores, posted interim revenues of €2.4bn, an 19% increase, or 17% on a constant currency basis. Underlying pre-tax profits rose to €144m from €112m.
On a like-for-like basis, sales rose 5.3% during the first half, boosted by a strong second quarter, when underlying revenues jumped 12.1%.
Trevor Masters, Pepco’s recently installed chief executive, said: “We have maintained our market leading position on prices and through continued focus on reducing the cost of doing business, we have been able to shield customers from price rises on some of our products at a time of significant inflationary pressure on household budgets.”
Looking to the current half, Pepco said the strong performance since the second quarter had continued into the third, as Covid restrictions eased across all its key territories.
Average weekly sales in the in last recent eight weeks were up 13.7% on pre-Covid levels, with Poundland’s average weekly sales ahead 4.3% on the same basis.
