Discounter giant Pepco has confirmed that it is actively exploring the sale of Poundland, with the company expecting an exit in September.

In its financial first quarter earnings report, chief executive officer Stephen Borhcert said that Pepco had taken action to improve Poundland's performance.

The company’s improvement plan includes rebuilding its core categories, streamlining the offer to customers at the point of sale, simplifying price points and refining its distribution networks.

“With consumer demand for value rising, the business is well-positioned for recovery under revitalised leadership,” Pepco said.

Regarding the sales process, the chief executive stated that it is “advancing” with the board confirming “a further update which will be provided at the appropriate time”.

Poundland has struggled with high costs and reduced sales, with the Poland-based group confirming a “weaker outlook” and “challenging trading conditions” in its latest financial report, with revenues falling 6.5 per cent to £830.8 million and like-for-like sales dropping 7.3 per cent in the first quarter of the year.

The discount chain now expects to record underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of up to £20 million for the financial year compared to a previous forecast of £50-70 million.

Pepco said that the downgrade relates to “highly challenging trading conditions” which have been further impacted by clearance of old stock and product availability issues.

Poundland's performance sharply contrasts with that of the wider Pepco business, which confirmed growth of 9.3 per cent to £2.17 billion in its latest financial year.

In March, the Group announced it was considering “all strategic options” to separate Poundland from the wider business, with a potential sale on the table. It also confirmed plans to focus on its more profitable Pepco-branded stores across Europe, which generate the majority of the group’s earnings.


Pepco Group also indicated it will explore selling its Dealz operations in Poland in the future, although it plans to continue managing the chain for now.

At the time, the company said it was also reviewing the performance of its Pepco business in Germany.

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