Pepco Group, the Poland-based owner of Poundland, is exploring “all strategic options”, including a potential sale of the UK discount retailer, as it faces mounting challenges in the UK retail sector.
The company, which operates 825 Poundland stores, is shifting its focus toward its more profitable Pepco brand and aims to establish a single pan-European format.
Pepco warned of weaker-than-expected annual earnings at Poundland, citing soaring costs and difficult trading conditions. The retailer’s underlying earnings are expected to land between €50m and €70m (£41.9m–£58.6m), with sales remaining negative in January and February.
Rising Costs and Budget Impact
Pepco highlighted the “increasingly challenging UK retail landscape”, noting that Poundland generated around €2bn in revenue in 2024 but faces growing cost pressures.
The company pointed to the UK government’s additional tax measures, set to take effect in April 2025, which will further increase Poundland’s wage bill. As a result, Pepco’s board is actively evaluating all options to separate Poundland from the group during financial year 2025, including a potential sale.
Retailers have been hit particularly hard by changes announced in last October’s budget, including higher national insurance contributions and another increase in the minimum wage.
Future of Pepco’s Operations
Beyond Poundland, Pepco Group is also reviewing its Dealz business in Poland, with plans to offload it at a later stage. Meanwhile, the company is assessing its Pepco operations in Germany.
As part of the restructuring, Barry Williams, who previously served as Poundland’s managing director, will return to lead the business ahead of a possible sale. Williams had been managing Pepco since September 2023.
Pepco Chief Confirms Poundland Sale Under Consideration
Stephan Borchert, chief executive of Pepco Group, stated: “The board and I are actively exploring separation options for Poundland, including a potential sale. We are also considering the future separation of the well-performing Dealz Poland in the medium term.”
He added: “Barry Williams did an excellent job as managing director of Pepco, steering it back to like-for-like sales growth. I am confident that, given his previous success at Poundland, he will play a key role in getting the business back on track.”
