Story
Pepco Shares Hit 52-Week High After Retailer Lifts Full-Year Guidance
Summary
The pan-European discount retailer materially upgraded its full-year gross margin and EBITDA targets, citing strong Q3 trading and a successful strategic refocus, sending its shares surging on the Warsaw Stock Exchange.
Shares in Pepco Group surged to a new 52-week high after the discount retailer significantly upgraded its full-year financial outlook in its third-quarter trading update for fiscal year 2026.
Upgraded Outlook and Q3 Performance
Pepco announced it is now targeting a full-year gross margin of approximately 51%, a material increase from its previous forecast of above 49.4%. The company also projects underlying EBITDA growth in the mid-teens range and expects to generate around €300 million in unlevered free cash flow.
The improved guidance was supported by strong third-quarter results. Key figures from the trading update include:
- Group revenues (excluding Dealz) of €1.09 billion, an increase of 8.5% at constant currency.
- Exceptional like-for-like sales growth of 15% in Western Europe, which the company attributed to its refocused clothing and general merchandise strategy.
Strategic Drivers and Market Reaction
AdManagement's confidence was further bolstered by strong trading in May and June, with CFO Willem Eelman signaling that the new 51% gross margin target could be conservative, according to the report. The recent completion of the sale of its Dealz business in Poland was also cited as a positive, as it removes a structurally weaker segment and sharpens the group's investment profile.
Investors reacted positively to the news, driving Pepco's stock up 2.8% to 37.53 PLN and reaching an intraday 52-week high of 38.17 PLN. The move was also supported by recent analyst upgrades, including a "buy" rating from Citi Research and an upgrade to "buy" from Trigon DM in late June.
Context for Investors
The rally appears to be driven by company-specific catalysts rather than broader market momentum, as U.S. indices were mixed and the local WIG30 index provided only a generally supportive backdrop. The combination of a beat-and-raise quarter, a more focused business strategy, and bullish management commentary has increased investor conviction in the company's operational turnaround.