Red Sea shipping problems have ‘limited impact’ on products – Poundland owner
Global shipping has been forced to revert to its ancient routes as the Houthi group started hitting cargo ships.
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Your support makes all the difference.The shipping constraints in the Red Sea are only having a “limited impact” on the products available in its stores, the owner of Poundland has said.
Pepco said it already has shipping contracts in place until the middle of the year, but that it had been hit by “additional surcharges” from some of its carriers as ships are routed around the Cape of Good Hope.
Global shipping has been forced to revert to its ancient routes as the Houthi group, which has been locked in a decade-long civil war in Yemen, started hitting cargo ships.
The group is based in the area around the Bab-el-Mandeb Strait, a small sliver of sea which controls access between the Indian Ocean and the Suez Canal.
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
“We note that the current situation in the Red Sea is leading to elevated spot freight rates and delays to container lead times,” Pepco said on Thursday.
“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.
“While there is limited impact on product availability currently, a prolonged issue in the region could also impact supply in the coming months.”
The business said that it had opened 203 new shops across several countries, including 54 former Wilko sites which have been converted into Poundlands.
It reached revenue of 1.87 billion euros (£1.60 billion) in the three months to the end of December, a record for the business and up 10.8% on the year before.
Poundland contributed 596 million euros of this (£511 million). It was operating 873 shops at the end of the year.
“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,” said Pepco chief executive Andy Bond.
“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.”