Pepco's Future Brightens
Pepco Raises Full-Year Guidance for 2026 Amid Strong Q3 and Dealz Poland Sale
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Key Points
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Borchert said, 'Consumer sentiment is very subdued, still everywhere in Europe,' underscoring price-conscious shoppers and the need for value-led strategies across Pepco's markets.
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Western Europe delivered 15% like-for-like revenue growth in the third quarter (excluding FMCG), with management noting the region is less competitive and more fragmented—a key growth opportunity for Pepco.
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Pepco's shares rose as much as 5% on the news of the upgraded guidance, signaling investor optimism about the post-restructuring momentum.
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Pepco opened 74 new stores in the quarter, bringing total store count to 4,151 as it continues to execute its expansion plan under the New Pepco strategy.
Pepco Group has raised its full-year guidance after a stronger-than-expected third quarter, with like-for-like sales rising 5.4% when stripping out its former food and everyday goods business. ESM Magazine reported that Western Europe led the way with 15% growth, pushing the group to target gross margins near 51% and mid-teens underlying profit growth for 2026.
Shares in the European discount retailer jumped as much as 5% on the news. The results mark a turning point for Pepco as it sheds non-core assets and doubles down on its value-focused clothing and homeware stores.
Dealz Poland Sale Clears the Path Forward
In June, Pepco sold Dealz Poland to Modella Capital. The deal was the latest step in its exit from FMCG — shorthand for food, drinks, and household goods. Pepco had already sold its Poundland chain in 2025. CEO Stephan Borchert called Dealz "a non-hero but essential step" in cleaning up the business.
The sale was not a clean break. Pepco kept a financial upside: it will receive 35% of the net cash from any future sale of Dealz. That clause lets Pepco benefit if Modella Capital flips the business at a profit later. Market Screener noted the deal reflects Pepco's broader push to focus only on its core discount retail format.
Western Europe Fuels the Growth Story
Western Europe grew 15% on a like-for-like basis in the third quarter, excluding FMCG. Management said the region is less competitive and more fragmented than Eastern Europe. That makes it easier for Pepco to win market share. The company plans to double its store count there by 2030.
The expansion is already underway. Pepco opened 74 new stores in the quarter alone, bringing its total to 4,151 locations. Market Screener reported that the company sees Western Europe as its biggest long-term growth engine under what it calls the "New Pepco" strategy.
CEO Flags Subdued Shoppers Across Europe
Despite the strong numbers, CEO Stephan Borchert sounded a cautious note on the consumer. "Consumer sentiment is very subdued, still everywhere in Europe," he said. Price-conscious shoppers are cutting back. That is actually good news for Pepco, which targets buyers looking for low prices on clothes and home goods.
The "New Pepco" strategy leans into this dynamic. It focuses on price leadership and a strong product range in its value stores. The idea is simple: when times are tough, shoppers trade down. Pepco wants to be where they land.
Upgraded Guidance Signals Investor Confidence
Pepco now targets a gross margin of close to 51% for the full year. It also expects mid-teens growth in underlying EBITDA — a measure of operating profit before taxes, interest, and accounting charges. Both targets were raised from earlier forecasts, reflecting the stronger-than-expected trading.
The 5% share price jump on the day shows investors are buying into the turnaround story. Market Screener noted the upgrade follows two big portfolio moves in quick succession — the Poundland sale in 2025 and the Dealz Poland deal in 2026. With those distractions gone, the market is betting Pepco can now focus and grow.
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