Pepco Group Bv · GPW:PCO
Pepco Group Bv — Investor Day (March 2025)
72 slides from Pepco Group Bv's investor day presentation, Mar 6, 2025
Slide 1: Capital Markets Day
Capital Markets Day th 6 March 2025
Slide 2: Disclaimer
2 Disclaimer This presentation includes forward-looking statements. All statements other than statements of historical facts may be forward-looking statements. Words and expressions such as latest estimate, FY24, continue, expects, outlook, leading, transition, planned or other similar words or expr
Slide 3: Welcome
Welcome
Slide 4: Agenda
Agenda Times Topic Speaker 1:30pm SECTION 1 – Executive summary Stephan Borchert (CEO) 1:45pm SECTION 2 – New management & culture Stephan Borchert (CEO) 1:55pm SECTION 3 – Sharpening our strategy Stephan Borchert (CEO) Simplify and streamline the Group portfolio Stephan Borchert (CEO) Refocus and d
Slide 5: Today's speakers
Today’s speakers Stephan Borchert Willem Eelman Mark Elliott Jorge Gervasi Pablo de Ayala Group CEO Incoming(1) Group Group Chief Operations Director Group CIO CFO Strategy & Western Europe Transformation Officer (1) Willem Eelman joined Pepco Group since 2 February 2025 and will formally assume the
Slide 6: Executive summary
Section 1 Executive summary
Slide 7: Issues of the past clearly identified
Executive summary New management & culture Sharpening our strategy Value creation framework Issues of the past clearly identified Lack of focus Group structure and Drifted away from standard Did too much, integration Pepco model far too quickly Operational impact Shareholder impact LFL pressure due
Slide 8: We are confident we have the fundamentals for future success at Pepco
Executive summary New management & culture Sharpening our strategy Value creation framework We are confident we have the fundamentals for future success at Pepco Operate in the attractive discount segments supported by strong fundamentals Support families across Europe with a price-leading customer
Slide 9: Stabilising actions in FY24 starting to have a significant positive impact at Pepco
Executive summary New management & culture Sharpening our strategy Value creation framework Stabilising actions in FY24 starting to have a significant positive impact at Pepco Average CEE store LFL recovery Gross margin recovery Strong cash generation profitability Pepco banner LFL(1) Pepco banner g
Slide 10: Pepco Group – “Reset for sustainable success” initiated
Executive summary New management & culture Sharpening our strategy Value creation framework Pepco Group – “Reset for sustainable success” initiated New management & culture Continue to Refocus and grow our Simplify and digitise Pepco’s Upgrade our Sharpened topline through Win in Western strategy st
Slide 11: Virtuous circle of growth delivering strong FCF
Executive summary New management & culture Sharpening our strategy Value creation framework Virtuous circle of growth delivering strong FCF Strong and consistent revenue growth Disciplined EBITDA growth deployment of Strong FCF through operating capital generation leverage Cash conversion 11
Slide 12: New management & culture
Section 2 New management & culture
Slide 13: New Pepco culture based on 3 core pillars
Executive summary New management & culture Sharpening our strategy Value creation framework New Pepco culture based on 3 core pillars Vision Customer-first “Our vision is to build the Focused Standardised operating model leading European clothing & homeware discount retailer” Efficient infrastructur
Slide 14: Renewed leadership team…
Executive summary New management & culture Sharpening our strategy Value creation framework Renewed leadership team… Stephan Borchert Group CEO Willem Eelman Ned Staple Viola Pablo de Ayala Mark Elliott Incoming Group Group General Schimansky Group CIO CSTO CFO Counsel Group CHRO Marcin Stanko Hugo
Slide 15: …supported by an engaged Board of Directors
Executive summary New management & culture Sharpening our strategy Value creation framework …supported by an engaged Board of Directors EXEC Active across dimensions Frederick Arnold Stephan Borchert Incoming Chair Group CEO NomCo Chair Bringing decisive support Sean Mahoney Andy Bond Neil Brown Inc
Slide 16: Sharpening our strategy
Section 3 Sharpening our strategy
Slide 17: Our new strategic framework
Executive summary New management & culture Sharpening our strategy Value creation framework Our new strategic framework Separating Poundland Simplify and streamline the Exit Pepco FMCG Strategic review of 1 and Dealz to fully focus Group portfolio format in Spain Pepco Germany on Pepco Defend kidswe
Slide 18: Simplify and streamline the Group portfolio to create clear focus
Simplify and streamline the Group portfolio to create clear focus
Slide 19: Simplified portfolio back to core proposition
Executive summary New management & culture Sharpening our strategy Value creation framework Simplify and streamline Simplified portfolio back to core proposition Current Pepco Group New Pepco Group Note: ‘New Pepco Group’ structure includes PGS and Central Operations. 19
Slide 20: Poundland: No synergies with renewed strategy – actively exploring separation options
Executive summary New management & culture Sharpening our strategy Value creation framework Simplify and streamline Poundland: No synergies with renewed strategy – actively exploring separation options EBITDA performance • A customer proposition reset is underway, Poundland EBITDA (IFRS 16) (€m) tak
Slide 21: Dealz – Managed for value, future potential divestment
Executive summary New management & culture Sharpening our strategy Value creation framework Simplify and streamline Dealz – Managed for value, future potential divestment • Dealz offers unique international FMCG and general merchandise products at the lowest prices • Over 300 stores (300-500sqm) ope
Slide 22: FMCG format (Pepco Plus) in Spain in course of exit
Executive summary New management & culture Sharpening our strategy Value creation framework Simplify and streamline FMCG format (Pepco Plus) in Spain in course of exit Why are we exiting Pepco Plus? Optimisation of existing estate • Refocus on a single standard Pepco store format Plan to convert the
Slide 23: Pepco Germany under strategic review
Executive summary New management & culture Sharpening our strategy Value creation framework Simplify and streamline Pepco Germany under strategic review 2 1 3 2 Sales 1 16 densities 2 lower and 1 Loss-making Flawed initial 4 3 6 operating 3 2 territory market entry 1 9 costs higher 2 than all other
Slide 24: Refocus and digitise Pepco’s customer proposition to drive LFL sales
Refocus and digitise Pepco’s customer proposition to drive LFL sales
Slide 25: Our LFL drivers in FY24/FY25 are based on price leading position with positive volume impact
Executive summary New management & culture Sharpening our strategy Value creation framework Refocus and digitise Our LFL drivers in FY24/FY25 are based on price leading position with positive volume impact… Reinvesting in price… …helping volume growth Average price per unit at Pepco banner (PLN) Ent
Slide 26: …and on good progress on improving our supply chain
Executive summary New management & culture Sharpening our strategy Value creation framework Refocus and digitise …and on good progress on improving our supply chain Stock intake Stock freshness Delivery in full on time Average % of stock <10 weeks old +36pp +10pp 70% +16pp 84% 74% 68% 34% 52% Avg DI
Slide 27: We have a clear strategy to refocus and digitise our customer proposition
Executive summary New management & culture Sharpening our strategy Value creation framework Refocus and digitise We have a clear strategy to refocus and digitise our customer proposition Refocus Create a better value Defend our core in kidswear Get back to discounter proposition for our core and gro
Slide 28: Pepco has a heartland position serving the everyday essential needs with young families in focus
Executive summary New management & culture Sharpening our strategy Value creation framework Refocus and digitise Pepco has a heartland position serving the everyday essential needs with young families in focus Pepco Poland customer split by Pepco Poland customer split by Pepco’s heartland mission an
Slide 29: Loyalty
Executive summary New management & culture Sharpening our strategy Value creation framework Refocus and digitise Our most loyal, valuable customers remain 24-44-year-old middle-income mums Share of Pepco Share of Pepco Yearly Average Key shoppers sales visits basket demographic Young Women aged fami
Slide 30: Our USP remains being the go-to kidswear-anchored discounter
Executive summary New management & culture Sharpening our strategy Value creation framework Refocus and digitise Our USP remains being the go-to kidswear-anchored discounter of clothing and homeware for young families Sales mix in Poland by player(1) 44% 13% 19% 24% Pepco Competitor 1 Competitor 2 C
Slide 31: Clear strategy to strengthen our customer proposition
Executive summary New management & culture Sharpening our strategy Value creation framework Refocus and digitise Clear strategy to strengthen our customer proposition Pepco strategy by customer segment • Defend core in kidswear Market(1) €3.5bn €7.3bn €10.1bn • Grow our share of wallet in Homeware a
Slide 32: Pepco’s digital offering is lagging competition
Executive summary New management & culture Sharpening our strategy Value creation framework Refocus and digitise Pepco’s digital offering is lagging competition Online product catalogue ✓ ✓ ✓ eCommerce ✓ ~ ✓ mCommerce ✓ ~ ✓ Loyalty scheme ✓ Basic offering ✓ Social media(1) ~7.3m followers ~6.1m foll
Slide 33: Good assets exist for the creation of a modern data & digital driven customer engagement
Executive summary New management & culture Sharpening our strategy Value creation framework Refocus and digitise Good assets exist for the creation of a modern data & digital driven customer engagement Customer insights Social presence ~31m card ~9m daily reach tokens(1) ~7m followers Brand awarenes
Slide 34: Next 24 months we will strategically invest in building data & digital capabilities
Executive summary New management & culture Sharpening our strategy Value creation framework Refocus and digitise Next 24 months we will strategically invest in building our data & digital customer engagement capabilities Build digital shop window and engagement Digitally Digital to support Pepco’s p
Slide 35: Combined, these initiatives will support sustained LFL growth in our core markets
Executive summary New management & culture Sharpening our strategy Value creation framework Refocus and digitise Combined, we are confident these initiatives will support sustained LFL growth in our core markets Customer Refocus on the customer and our core USP (everyday essentials for young familie
Slide 36: Continue to grow our topline through measured expansion in CEE
Continue to grow our topline through measured expansion in CEE
Slide 37: Poland and CEE remain the strong core of our business
Executive summary New management & culture Sharpening our strategy Value creation framework Measured expansion in CEE Poland and CEE remain the strong core of our business €3.3bn Revenue (FY24) 3,232 stores (FY24) (85% Pepco) 13 countries 1 1 ~33% 90%+ Market share CEE brand awareness(1) in kidswear
Slide 38: Pepco CEE store profitability remains strong
Executive summary New management & culture Sharpening our strategy Value creation framework Measured expansion in CEE Pepco CEE store profitability remains strong Over 99% of Pepco stores in CEE are profitable Pepco CEE FY24 store EBITDA(1) (€k) Only 11 loss-making stores (1) Defined as store margin
Slide 39: Macroeconomic and market conditions continue to support long-term growth across Poland and CEE
Executive summary New management & culture Sharpening our strategy Value creation framework Measured expansion in CEE Macroeconomic and market conditions continue to support long-term growth for Pepco across Poland and CEE Real GDP is forecast to grow …underpinned by strong growth …helping drive clo
Slide 40: Our CEE markets are now at different levels of maturity requiring a more tailored approach
Executive summary New management & culture Sharpening our strategy Value creation framework Measured expansion in CEE Our CEE markets are now at different levels of maturity requiring a more tailored approach… > Thoughtful expansion Mature Growth markets stars > Enlargement/relocations Mature > Stor
Slide 41: …and we see a potential of ~1,800 new stores across CEE
Executive summary New management & culture Sharpening our strategy Value creation framework Measured expansion in CEE …and we see a potential of ~1,800 new stores across CEE (1) CEE market maturity levels(1) CEE store number and market maturity(1) FY25-FY27 targets ~75% ~90% 100% ~5,030 ~4,250 ~800
Slide 42: Win in Western Europe
Win in Western Europe
Slide 43: Our Western Europe footprint today
Executive summary New management & culture Sharpening our strategy Value creation framework Win in Western Europe Our Western Europe footprint today €0.6bn(1) ~15%(1) Revenue (FY24) Pepco revenue (FY24) Under strategic review 50%+ 30%+ Brand awareness Brand awareness in Spain(2) in Italy(2) 5 countr
Slide 44: What are we doing to fix the self-inflicted issues of our market entry strategy?
Executive summary New management & culture Sharpening our strategy Value creation framework Win in Western Europe What are we doing to fix the self-inflicted issues of our market entry strategy? New senior FMCG exit Building New DC Controlled management confidence in infrastructure expansion of our
Slide 45: Western Europe is starting to deliver encouraging results
Executive summary New management & culture Sharpening our strategy Value creation framework Win in Western Europe Western Europe is starting to deliver encouraging results Store profitability has strongly improved Store EBITDA margin(1) (%) Double-digit LFL in standard stores YTD in Iberia and Italy
Slide 46: Western Europe demographics and macroeconomics continue to be favourable
Executive summary New management & culture Sharpening our strategy Value creation framework Win in Western Europe Western Europe demographics and macroeconomics continue to be favourable for clothing & homeware discount retail Immigration is forecast to offset Annual household spend on Clothing & ho
Slide 47: We have a similar young family shopper in Western Europe and USP vs. competitors
Executive summary New management & culture Sharpening our strategy Value creation framework Win in Western Europe We have a similar young family shopper in Western Europe and USP vs. competitors Sales mix in Spain by player(1) 27% 17% 19% 36% Pepco Competitor 1 Competitor 2 Competitor 3 Online compe
Slide 48: Pepco outcompetes all direct competitors on entry price basket
Executive summary New management & culture Sharpening our strategy Value creation framework Win in Western Europe Pepco outcompetes all direct competitors on entry price basket Pepco price advantage in clothing in Spain Pepco price advantage in GM in Spain Pepco - - - - Competitor 1 31% 13% Competit
Slide 49: Our customer brand franchise is still nascent, but growing
Executive summary New management & culture Sharpening our strategy Value creation framework Win in Western Europe Our customer brand franchise is still nascent, but growing Total brand awareness Net promoter score 2023 2024 95% +20 18 +17 18 +17 Further room +16 for growth 52% +14 13 13 +13 +11 37%
Slide 50: New DC infrastructure in Spain has improved both costs and lead time to stores
Executive summary New management & culture Sharpening our strategy Value creation framework Win in Western Europe New DC infrastructure in Spain has improved both costs and lead time to stores (= better availability) Immediate results from newly opened DC in Spain 45,000 sqm warehouse in Servicing G
Slide 51: Our current model is organised in 3 existing location types
Executive summary New management & culture Sharpening our strategy Value creation framework Win in Western Europe Our current model is organised in 3 existing location types Select existing locations Key characteristics Key metrics of current store estate Avg. sales Store EBITDA A-stores • High traf
Slide 52: Plans for targeted expansion based on identified white-space analysis
Executive summary New management & culture Sharpening our strategy Value creation framework Win in Western Europe Plans for targeted expansion based on identified white-space analysis Identified available white-space locations(1) % Future openings Spain Italy A-stores ~110 ~150 Planned 60-70 store 2
Slide 53: We have conviction in our right to win in Western Europe
Executive summary New management & culture Sharpening our strategy Value creation framework Win in Western Europe We have conviction in our right to win in Western Europe New senior FMCG exit Building New DC Controlled management confidence in infrastructure expansion of our customer and simplified
Slide 54: Upgrade our core operating platform to enable continued growth
Upgrade our core operating platform to enable continued growth
Slide 55: We will address the core issues of our operating platform over next 2-3 years
Executive summary New management & culture Sharpening our strategy Value creation framework Upgrading our supply chain We will address the core issues of our operating platform over next 2-3 years Information technology Human resources Plan Buy Move Sell Financial steer & control Compliance Key ambi
Slide 56: Transformation of our distribution network over next 2-3 years
Executive summary New management & culture Sharpening our strategy Value creation framework Upgrading our supply chain Transformation of our distribution network over next 2-3 years will drive efficiency, LFL growth and WC reduction Pepco supply chain network today Key actions Outcomes Two-speed sup
Slide 57: A very intense IT roadmap defined for FY25-27
Executive summary New management & culture Sharpening our strategy Value creation framework Upgrading core infrastructure A very intense IT roadmap defined for FY25-27 Data & digital infrastructure Data & digital Tech change roadmap Integrated E2E supply planning suite Integral E2E value chain Stand
Slide 58: ESG strategy
ESG strategy
Slide 59: Updated ESG strategy with sound governance structure
Executive summary New management & culture Sharpening our strategy Value creation framework ESG strategy Updated ESG strategy with sound governance structure Planet People Product Reduce our carbon footprint Develop our people Use responsibly sourced Use less materials materials in products Care for
Slide 60: We have a clear roadmap to achieve 2030 targets
Executive summary New management & culture Sharpening our strategy Value creation framework ESG strategy We have a clear roadmap to achieve 2030 targets 50% reduction 25%(1) reduction 100% 20% reduction Scope 1 & 2 Supply chain Own-brand product Operational carbon emissions carbon emissions packagin
Slide 61: Value creation framework
Section 4 Value creation framework
Slide 62: Pepco is now positioned at an inflection point
Executive summary New management & culture Sharpening our strategy Value creation framework Key financial objectives Pepco is now positioned at an inflection point Strong momentum in revenue Gross margin recovered back to pre-Covid levels Pepco banner revenue (€bn) Pepco banner gross margin +18% CAG
Slide 63: 2025 year of inflection point – portfolio choices
Executive summary New management & culture Sharpening our strategy Value creation framework Key financial objectives 2025 year of inflection point – portfolio choices Today Tomorrow FMCG format exit Group-wide Manage for value (future divestment) Pepco as core asset Actively evaluating options for s
Slide 64: Pepco Group guidance: FY25
Executive summary New management & culture Sharpening our strategy Value creation framework Key financial objectives Pepco Group guidance: FY25 All numbers on an underlying basis FY24 pro-forma FY25 Revenues €3,853m(2) High single-digit growth ‘New Gross margin % 47.5%(3) Flat y-o-y Pepco’ (1) EBITD
Slide 65: Pepco Group: mid-term ambition
Executive summary New management & culture Sharpening our strategy Value creation framework Key financial objectives Pepco Group: mid-term ambition Mid-term (FY26 onwards) Net new stores At least 250 Revenues At least 7% CAGR P&L Gross margin % ~ 48% ‘New Pepco’ (1) EBITDA (IFRS 16) At least 9% CAGR
Slide 66: Building blocks for improved shareholder return
Executive summary New management & culture Sharpening our strategy Value creation framework Value creation framework Building blocks for improved shareholder return Potential re-rating opportunity Current Grow Pepco EBITDA, Optimize distributable Divest Non-Core Mid-term Market Value NI and EPS FCF
Slide 67: Capital allocation framework
Executive summary New management & culture Sharpening our strategy Value creation framework Value creation framework Capital allocation framework Annual estimated Allocation Purpose capital allocation • New stores & upgrades Organic • CEE ✓ Grow EBITDA €85m – €95m growth • Iberia & italy Operational
Slide 68: New Pepco capital returns approach
Executive summary New management & culture Sharpening our strategy Value creation framework Value creation framework New Pepco capital returns approach After investing in the core business and growth initiatives Pepco Group expects to generate substantial Free Cash Flow Pepco will aim to return exce
Slide 69: Closing remarks
Closing remarks
Slide 70: Our commitment to shareholders
Our commitment to shareholders We are focused on creating substantial value for shareholders We strive to refocus on our core Pepco business We will apply a higher level of operational rigour and excellence at Pepco We will continue to expand in high ROIC geographies and work hard on making WE a pro
Slide 71: Q&A
Q&A
Slide 72: De0CO
De0CO QrOUPp ©