Pepco Group (PCO) H2 2025 earnings summary

Executive summary

• FY25 was a transformational year, marked by the sale of Poundland, exit from FMCG, and a strategic focus on the core Pepco brand, driving improved profitability and operational agility.

• Revenue grew 8.7% to €4,523m, with underlying profit after tax up 19.7% to €219m and underlying EBITDA up 10.3% to €865m.

• 247 net new stores were opened, with strong expansion in CEE and Western Europe, and digital transformation initiatives launched.

• Enhanced shareholder returns included a 9.6 cents/share dividend, €100m share buybacks executed/underway, and €334m free cash flow.

• ESG progress included improved gender balance in leadership, reduced emissions, and increased community investment.

Financial highlights

• Revenue reached €4.5bn (+8.7% YoY); gross margin improved 100bps to 48.0%; underlying EBITDA margin rose to 19.1%.

• Underlying profit after tax rose 19.7% to €219m; underlying EPS up 19.9% to 0.38c/share.

• Free cash flow was €334m, supporting a 55% increase in dividend to 9.6 cents/share and ongoing share buybacks.

• Group LFL growth was 2.6% including FMCG; Western Europe LFL growth 14.5% (excl. FMCG).

• Capex reduced to €108m in FY25, with guidance to increase in FY26.

Outlook and guidance

• FY26 revenue growth expected at 6–8%, with gross margin at least 48% and underlying EBITDA growth of at least 9%.

• Underlying net earnings expected to exceed 25% YoY growth in FY26.

• CapEx for FY26 guided at €160–180m, with free cash flow expected to exceed €200m.

• Targeting 250 net new stores in FY26, mainly in CEE and Western Europe.

• Midterm guidance upgraded: gross margin at least 48.5%, free cash flow over €250m, and net earnings CAGR at least 15%.