Pepco delivered a strong first half of FY26, with profit, margins and cash generation all moving higher as the retailer continued to sharpen its strategy. Underlying profit after tax rose 52.3% to €198 million, while underlying EBITDA increased 17.5% to €516 million.
The results also support a more ambitious growth plan in Western Europe. Pepco now expects to open at least 600 new stores in existing Western European markets between FY27 and FY30, doubling its presence there over that period.
Sales and margins improve
Group revenue reached €2.47 billion, up 5% year on year, while like-for-like sales excluding FMCG rose 3.6%. Gross margin improved to 49.7%, up 250 basis points. Net debt fell to €139 million on a pre-IFRS 16 basis, and free cash flow reached €181 million, more than triple the prior-year level.
The group is now using that cash strength to reshape shareholder returns. It plans to pay out excess levered free cash from FY27 onward and intends to make a one-off capital return of up to €400 million in FY26, while also raising its long-term dividend payout ratio toward 40% from 25%.
Digital gains and current trading
The retailer also made progress on its digital push, with the new mobile app in Poland attracting about 2 million downloads and more than 1 million customers joining the Pepco Club loyalty program. Those customers are spending about twice as much as non-members.
Current trading has remained solid too. In the third quarter-to-date, like-for-like sales rose 1.5% excluding FMCG, and the business saw a sharp acceleration in the two weeks to May 16, when LFL growth reached 11.6% excluding FMCG.
Outlook stays upbeat
Pepco reaffirmed its full-year guidance, expecting 6% to 8% revenue growth, low-teens underlying EBITDA growth and at least 50% growth in underlying net earnings. It also expects to open around 250 net new stores in FY26.
