Poundland owner says Red Sea shipping issues have 'limited impact' on stores

18 January 2024 , 10:44

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Shipping issues in the Red Sea are having a "limited impact" on products available in Poundland stores (Image: PA Media)

The owner of Poundland, Pepco, has said that the shipping issues in the Red Sea are only having a "limited impact" on the products available in its stores.

However, it has been hit by "additional surcharges" from some carriers as ships are rerouted around the Cape of Good Hope due to conflicts in Yemen. Global shipping has had to revert to old routes as cargo ships are being targeted by the Houthi group, involved in a decade-long civil war in Yemen.

This group is based near the Bab-el-Mandeb Strait, a crucial sea passage between the Indian Ocean and the Suez Canal. Pepco said today: "We note that the current situation in the Red Sea is leading to elevated spot freight rates and delays to container lead times,"

The company added: "The majority of our freight costs are contracted until the end of the third quarter, but the business is facing additional surcharges from carriers in relation to the longer shipping routes being taken."

They warned: "While there is limited impact on product availability currently, a prolonged issue in the region could also impact supply in the coming months." Despite these challenges, the company announced that it had opened 203 new shops across several countries, including converting 54 former Wilko sites into Poundlands.

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Pepco has reported a record revenue of 1.87 billion euros (£1.60 billion) for the last three months of the year, up 10.8% from the previous year. Poundland contributed a significant 596 million euros (£511 million) to this total, operating 873 shops by the end of the year.

Pepco's chief executive, Andy Bond, said: "We are making good progress against our renewed strategy, as outlined in October last year, to improve profitability and cash generation in our core established business, while delivering more measured profitable growth. We are acting decisively at pace, we have initiated a more targeted store opening programme, paused the new-look refit programme and stopped activities that will not produce appropriate returns."

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Lawrence Matheson