Discount retailer owner Poundland has warned that its UK shoppers seem to be suffering the most as the cost of living crisis picks up pace, with spending on essentials even hitting.
Pepco Group, which also has the European discount brands PEPCO and Dealz in its stable, blamed UK wage growth below the inflation rate, currently at a 40-year high, and predicted it would rise further in the next few months.
The Warsaw-listed company said that while inflationary pressure was higher in its Central and Eastern European markets, higher wage growth rates now offset the impact on sales.
“Specifically in the UK, the cost-of-living crisis has affected customers’ disposable income, as they are declining even on essential short-term purchases, ”Pepco said.
The company said it sought to alleviate pressure on its own prices by reducing costs, even by increasing the use of self-service boxes, while absorbing some of the costs it faced.
“Our continued focus on reducing business costs means that we are able to offset some of our input inflation, which allows us to protect prices for all of our cost-conscious customers,” Pepco added.
It revealed a £ 30m investment to the whole group in prices during the first half of its financial year through March 31st.
He said, Pepco said, that his gross margin had had an impact of 137 basis points.
Poundland’s revenue over the six months rose 11.4% to £ 940 million, thanks to the opening of new stores.
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Despite the growing trend of consumer caution, Pepco reported that its Poundland business was still trading ahead of pre-pandemic levels, gaining market share and expressed confidence that its discount position would prosper as prospects of the economy slow down.
Acting Chief Financial Officer Mat Ankers told Reuters: “We are a valuable retailer, this is our moment, this is when we can really push our agenda.
“The best strategy to navigate in the current times is to grow and scale,” he said, noting that the group opened a total of 192 stores in the first half, bringing the total to 3,696 in 17 countries.