UK customers appear to be more affected by the cost of living crisis than those elsewhere in Europe, the company behind Poundland said. Pepco said UK shoppers were cutting back on essential purchases as they faced a hit to their disposable income.
The company operates in several European countries, including Poland, the Czech Republic, Italy, Spain and Germany. He said that in Central and Eastern Europe, the cost of living is offset by strong wage growth, at least in the short term.
In Western Europe, wages are not increasing, which lowers customer spending. But Pepco singled out the UK as particularly bad. He said: “In Western European markets, soaring inflation in an environment of stagnant wage growth quickly led to an absolute decline in consumer spending.
“Specifically in the UK, the cost of living crisis has impacted customers’ disposable income as they even cut back on essential short-term purchases. Our continued focus on reducing the cost of doing business means we are able to offset some of our input inflation, allowing us to protect prices for all of our cost conscious customers. »
The firm said Poundland’s revenues rose 11.4% in the first half of last year to €1.1bn (£940m), although on a like-for-like basis they increased by only 3.3%. Overall group sales rose 18.9% to €2.4bn (£2.1bn).
Chief Executive Trevor Masters said: “As the pandemic restrictions have gradually eased, it was … encouraging to see the strong return of customers, and the continuation of that in Q3 (the third quarter) has resulted in an increase in group like-for-like sales above pre-Covid levels for the comparable period three years ago.
“We have become a stronger and more resilient operator of this unprecedented recent period by being a bigger group thanks to the acceleration of our store openings, a better retailer thanks to the renewal of stores and proposals, and a more company. simple through large-scale cost reductions.
“We have maintained our market leadership position on pricing and through our continued focus on reducing the cost of doing business, we have been able to protect customers from price increases for some of our products at a time significant inflationary pressure on household budgets.”