The crisis in the cost of living has caused UK shoppers to cut even essential items as wages do not keep pace with inflation, the Poundland owner said.
Pepco Group, which owns Poundland in the UK, Dealz in Ireland and the Pepco chain across Europe, said that while absolute levels of inflationary pressure were higher in Central and Eastern European markets, wages were higher. in these regions they substantially offset this in the short term. term.
However, the company added: “In Western European markets, the sharp rise in inflation in a stagnant wage growth environment has quickly led to absolutely lower consumer spending.
“Specifically in the UK, the crisis in the cost of living has affected customers’ disposable income, as they are declining even in essential short-term purchases.”
The discount warning came when the DFS furniture retailer said its orders had suffered once since April, with a decrease in the number of orders of around 2% compared to pre-order levels. pandemic, which analysts said was about 50% lower than last year. Shares of the couch specialist fell nearly 16 percent, as analysts said they were lowering earnings expectations by more than a third.
Pepco said its profit margins had been affected while trying to absorb some cost increases, while looking to make cuts so that their prices could be reduced for “cost-conscious customers”. Sales rose nearly 19% during the six months to March 31, and profits rose nearly 29% as it opened 235 new stores across Europe.
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Trevor Masters, CEO of Pepco Group, said: “We have maintained our market-leading position in pricing and thanks to our continued focus on reducing the cost of doing business, we have been able to protect our customers from the increase. of prices for some of our products at a time of significant inflationary pressure on family budgets. “
Pepco said sales had risen above pre-pandemic levels in the eight weeks since the end of the year, with underlying sales on the Poundland chain averaging 4.3% per week.
He said the invasion of Ukraine, which borders three of the group’s largest operating territories, had helped boost sales due to the influx of refugees.
But he said the rise had been “offset to some extent” by the invasion “which aggravated the disruption to the existing supply chain and headwind inflationary winds”.