The owner of Poundland has revealed a £642m (€775m) hit to the UK discount retailer, citing several major headwinds including rising costs amid the budget burden facing businesses.
Pepco said it was taking the non-cash impairment charge – a reduction on the perceived paper value of its assets – following “challenges” including poor performance and increased competition across its last financial year.
Pepco said it was also taking account of a weaker outlook and higher costs facing Poundland, which employs around 15,000 staff.
The charge, the company added, was primarily a goodwill gesture based on the original acquisition of the chain.
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The group recorded a €662m (£548m) net loss for its 2024 financial year, which covers the 12 months to 30 September, on the back of the decision.
The private sector has widely warned of a hit to investment, jobs and pay on the back of the chancellor’s 30 October budget which will raise employer national insurance contributions and the National Living Wage.
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The retail sector has warned of a £7bn hike to its costs in 2025 alone.
Pepco indicated that the budget would add pressure at a time when comparable sales growth was in decline at Poundland, with sales flat on last year.
Underlying profits in the UK arm fell by 63%.
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Pepco said: “As a result of the material underperformance in Poundland, along with slower growth prospects and a higher cost outlook in the UK following the recent budget, we have assessed the carrying value of that investment and recognised a non-cash impairment of the goodwill and brand asset related to Poundland of €775m, which has driven a reported net loss for the year for the Group of €662m.
“On an underlying basis, Group net profit for FY24 was €179m, up 14.0% on the prior year.”
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