Discounter Pepco ordering earlier Christmas shipments amid Red Sea delays

By James Davey

LONDON (Reuters) - European discount retailer Pepco Group is ordering earlier Christmas shipments from China to ensure timely delivery for the key festive trading period, its boss said on Thursday.

The Warsaw-listed owner of the Pepco, Poundland and Dealz brands reported a worse-than-expected 4.3% fall in third-quarter underlying revenue, which it said partly reflected a delay in summer stock hitting store shelves due to shipping issues in the Red Sea.

Disruption to shipping through the Suez Canal, due to attacks by Iran-aligned Yemeni Houthi militants in the Red Sea, has continued through 2024.

"We are very confident that we are going to be in better shape for Christmas than we otherwise would have been because we've pulled stock forward. Others will do the same," Pepco Group executive chair Andy Bond told Reuters in an interview.

A lot of the group's Christmas inventory, which historically hits its balance sheet in October, will this year hit it in September.

"So when we get to our year end (Sept. 30), we'll see significantly greater inventory on our balance sheet because we'll have bought forward Christmas shipments to be in a safe place," said Bond.

He said a consequence of retailers across the sector pulling forward stock from China by two to three weeks was "a significant blip in freight rates."

Sainsbury's, Britain's second largest supermarket group which makes a quarter of its revenue from general merchandise, said last week it has built in additional lead time for its Christmas orders to help mitigate any potential delays.

(Reporting by James Davey; Editing by Andrew Heavens)