June 23, 2020 / 1:21 PM / 11 days ago

Poundland owner Pepco's sale by Steinhoff delayed by coronavirus

LONDON (Reuters) - The boss of Pepco Group, the owner of British discount retailer Poundland, said the coronavirus crisis has delayed the sale of the group by its troubled South African parent company Steinhoff (SNHJ.J).

Steinhoff, which has been battling the fallout from a 2017 accounting scandal, said last year it was evaluating a range of strategic options for Pepco Group, including a potential public listing, private equity sale or trade sale.

“As far as how that happens and when? I think clearly Covid has thrown things up in the air,” Pepco Group CEO Andy Bond told Reuters on Tuesday.

“(Steinhoff’s exit)..is almost an inevitability, simply because technically Steinhoff is going through a restructuring programme with its creditors and those creditors need cash back,” he said.

But Bond, a former boss of UK supermarket group Asda, said management’s current focus was on getting the retailer through the crisis, which caused a 16.3% fall in first-half to end-March pretax profit to 89 million euros ($101 million).

“Right now it’s very much a secondary issue for everyone. It’s about getting the business back into good health first and foremost,” he said.

Pepco Group, which also owns the PEPCO and Dealz brands in Europe, said revenue rose 9.7% in the six months to March, having been up 14.4% in the five months to end-February before the virus hit.

It said revenue had returned to pre-Covid levels with 2,880 of its 2,913 stores trading as of June 21, although like-for-like sales remained negative.

It warned it expected revenue to remain below historical norms for the remainder of 2020.

“However, it is likely that consumer demand for discount retailing will increase in a period of prolonged economic uncertainty and we are extremely well placed to take advantage of this trend,” Bond said.

Reporting by James Davey, Editing by Paul Sandle and Ed Osmond

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