European discount retailer Pepco Group has today guided for underlying core profit growth of at least 9% and 250 store openings in the 2026 financial year, signalling confidence in its strategy after the sale of Poundland in Britain.
For the year that ended on September 30, the Warsaw-listed group reported a 10.3% rise in its underlying earnings before interest, taxes, depreciation and amortization to €865m.
The annual results were the first to be published since the company reset its strategy in March to focus on its main Pepco brand.
"2025 was a real turning point for the group," CEO Stephan Borchert said in a statement, adding that strong results on gross margin and free cash generation reflected the success of the new strategy.
The group's gross margin improved by one percentage point to 48% in the 2025 financial year, which it attributed to its exit from the lower-margin fast-moving consumer goods segment and a renewed focus on offering competitively low prices in clothing and general merchandise.
Pepco said it would increase its dividend payout ratio to 25% of underlying net profit, against 20% previously. This led to a 57% rise in its annual dividend to 9.6 euro cents per share.
The retailer also raised its free cash flow target to €250m, having previously aimed to generate more than €200m annually.
The group said like-for-like sales at the Pepco brand were up 3.9% so far in the first quarter, excluding food items. However, performance for the whole group was weighed down by weakness at its Dealz business, it added.
