Poundland owner Pepco to ‘refocus’ on Central and Eastern Europe after back-to-back profit warnings

Poundland owner Pepco said it will “refocus” on its struggling Central and Eastern Europe arm, as it reshuffled its management team following a second profit warning in a little over two weeks.

The business said “record warm weather” in its core markets led to poor demand for clothes in countries like Poland and the Czech Republic, as sales declined year-on-year. It hasn’t yet benefited from a slowdown in inflation, as it is still selling items that were bought earlier in the year at high costs.

The warning comes despite the Poundland arm of the business performing better, after record quarterly sales in the three months to 30 June.

Despite the strong performance in the UK, Pepco launched a review to focus on getting its “core” Central and Eastern Europe business back on track, launching a strategy review to “refocus” on the region. It reshuffled its management team, putting Poundland boss Barry Williams in charge of the Central and Eastern Europe-based Pepco brand instead, with previous Pepco boss Anand Patel leaving with immediate effect.

Executive chair Andy Bond, who took charge of executive functions when Trevor Masters quit earlier this month, said: “We remain confident in the opportunity of building Europe’s leading variety discount retailer offering great value to consumers across a range of FMCG, clothing and general merchandise products. However, it is clear that we need to refocus on delivering for our customers in our core business while delivering more measured growth.

“We need to improve profitability and cash generation in our established business alongside a more targeted growth plan in markets where we have an existing presence.”

In a sign that the UK still remains an important area of growth for Pepco, Poundland agreed to buy 71 shops from collapsed rival Wilko earlier this month. These shops will be rebranded as Poundlands.