Poland's Pepco will not raise prices, efficiency drives margins, executive says

By Marta Maciag

Jan 23 (Reuters) - European discount retailer Pepco does not plan to raise prices to boost margins, instead banking on improved efficiency amid subdued consumer sentiment, the finance head ?of its main brand said on Friday. Pepco's strategy is centred ?around its namesake brand after the sale of Poundland ?in Britain last year, a move ?designed to simplify ?the group and focus on its higher-margin operations in continental Europe.

"Our ?model is not to ?increase prices," Hugo van Santen, chief financial officer of the Pepco brand, told Reuters ?in an interview. "We want to ?be ?price leader ... whilst at the same time improving margins."

The Warsaw-listed group is counting on scale benefits ?from new stores, logistics improvements, and its vertically integrated sourcing operations in Asia to defend its price leadership, van Santen said. Pepco's focus on low-cost daily essentials helped the group report a 4.3% revenue ?rise ?in its fiscal first quarter, which ended in December.

It is strengthening its position in the ?discount market against rivals such as LPP's Sinsay, van Santen said, helped by a dense network of stores that operate in smaller towns.

The company, which opens about five new stores a week, plans to enter North Macedonia this ?year. It is also looking to capitalize on its expansion into Western Europe after its model found success in Spain, Portugal and ?Italy. (Reporting by Marta Maciag, editing by Milla Nissi-Prussak)