Pepco’s first quarter was “solid” the pan-European value retailer said this week, despite the underperforming Dealz chain continuing to be a drag on its results.

Q1 covered the three months to the end of December and saw group revenues up 4.3% on a constant currency basis to €1.4 billion. This reflected “solid Pepco growth partly offset by the expected temporary drag from the Pepco FMCG exit, which will reduce during the year, and a softer topline performance in Dealz”. 

The Dealz chain operates in Ireland and the Isle of Man was well as in Poland and is the equivalent of the UK Poundland chain that Pepco sold last year.

Group like-for-like (LFL) revenues (excluding FMCG) grew 3.3% during the quarter with the Pepco chain up 4.2% LFL. That number was helped by “a particularly strong result in December, despite a highly competitive and promotional seasonal period”. It saw positive Q1 LFL revenue in key markets including Poland, Iberia and Italy.

But Dealz LFL revenues declined by 7.7% in Q1. The business “experienced disruption in October and November 2025 as it re-platformed its operations following the Poundland sale, and thereafter saw a material recovery of LFL in December 2025”. The group “continues to progress with a divestment of Dealz, with an intended completion in 2026”.

Even with the Dealz problems, the group gross margin in Q1 was 360bps higher year-on-year, and in line with the final quarter of FY25 (49.4%).

CEO Stephan Borchert called it an “encouraging start to the year, with Pepco delivering a resilient performance. I’m especially pleased with our strong December trading, against intensifying promotional activity across our key territories. Western Europe, in particular, continues to perform well, achieving consistent double-digit like-for-like revenue growth (excluding FMCG) through the quarter. The group also delivered a significant year-on-year increase in gross margin, despite disciplined price investment.

“Consumer confidence in some markets remains subdued against an ongoing uncertain macroeconomic backdrop, but our focus on delivering exceptional value is resonating with customers who continue to prioritise value in their everyday shopping decisions.