By Anthony O. Goriainoff
Discount retailer Pepco Group said conflict in the Red Sea has had a limited effect on current product availability, but could hurt supply in the coming months if it continues.
The discount retailer–which houses Poundland in the U.K. and Dealz and Pepco in continental Europe–said Thursday that attacks on vessels in the Red Sea by Houthi fighters was leading to higher spot freight rates and delays to container lead times.
Although Pepco’s freight costs are contracted until the end of its third quarter, it faces additional surcharges from carriers stemming from the longer routes being taken by shipping companies avoiding the Red Sea.
Meanwhile, the company said that for its fiscal first quarter ended Dec. 31, group like-for-like revenue fell 2.3% although there was an improving trend during the period.
Revenue grew on a constant currency basis grew 11% from a year earlier to 1.9 billion euros ($2.07 billion), with the Pepcobusiness’s like-for-like revenue falling 3.7% against a tough comparative period when sales were up by 20% from the year-prior period.
Revenue at Dealz fell 4.6%, driven by planned lower stock availability in general merchandise categories. Poundland’s performance continued to be robust with a strong Christmas performance driven by demand for fast-moving consumer goods, the company said.
Write to Anthony O. Goriainoff at anthony.orunagoriainoff@dowjones.com
