Pepco Stock Surges on €400 Million Buyback and Upgraded Outlook

Shares of Pepco Group surged on the Warsaw Stock Exchange after the pan-European discount retailer formally launched a special share buyback program of up to €400 million. The stock climbed 4.6% to 40.88 PLN, reaching a new 52-week high of 40.95 PLN during intraday trading.

Buyback Program Drives Rally

The capital return is being executed through a proportional tender offer, with the company offering to buy back shares at 41.76 PLN each. This price represents a premium to the current market level, acting as a significant incentive for shareholders to participate and providing a strong near-term anchor for the stock price.

The buyback follows a series of positive operational and strategic updates that have bolstered investor confidence in the company's financial health and trajectory.

Upgraded Guidance Underpins Confidence

Just days earlier, Pepco released a strong third-quarter trading update for fiscal year 2026. The company announced it was raising its full-year gross margin guidance to approximately 51%, a notable increase from its previous forecast of above 49.4%. The company also guided for underlying EBITDA growth in the mid-teens.

Key figures from the Q3 update include:

Ad

• Revenue of approximately €1.09 billion (excluding Dealz), an increase of 8.5% at constant currency.
• CFO Willem Eelman described the new 51% gross margin target as "conservative" following strong trading in May and June.

Further strengthening its strategic position, Pepco completed the sale of its Dealz Poland business to Modella Capital on July 13. The divestment streamlines the group's portfolio and enhances its capacity for capital returns, as evidenced by the buyback announcement.

Market Context and Analyst Views

Pepco's rally was driven by company-specific catalysts, standing in contrast to softer U.S. equity markets on the same day. The move was supported by positive analyst sentiment, with Citi Research maintaining a buy rating and Trigon DM upgrading its recommendation on the stock.

The broader Warsaw Stock Exchange has provided a constructive backdrop for the advance, with the WIG index having gained over 46% in the past twelve months.