Discounter Pepco confirms outlook, says Middle East war impact minimal

Adds CEO comments in paragraphs 3, 5-7, updates share move in paragraph 4, adds context in paragraph 9, rewrites throughout

By Adrianna Ebert and Alicja Surdy

March 26 (Reuters) - European discount retailer Pepco Group PCOP.WA said on Thursday it remained confident in delivering full-year results in line with the guidance set out in December, despite the uncertain consumer and geopolitical backdrop.

The conflict in the Middle East has had a minimal impact on the company, Pepco said, adding it was well-positioned to manage the evolving situation.

"So far we are seeing a stabilized situation, particularly in our supply chain," CEO Stephan Borchert told Reuters, adding the company was confident in its resilient business model and was planning forward with no major disruption.

The company's shares were up 3.1% at 1520 GMT.

Pepco added it has structurally lower exposure to short-term demand volatility and fast-fashion cycles. The company is also well-positioned to attract middle-class consumers who may be looking to buy cheaper products, Borchert said.

The discounter expects to add around 250 stores to its network this year. The planned openings are "across the board," with a focus on Central and Eastern Europe, Borchert said. He added that planned openings in Western Europe have more than doubled.

Borchert also said sales in Iberia and in Western Europe have exceeded the group's expectations, giving it confidence in potential future growth in the region.

The company will simultaneously continue expanding in Central and Eastern Europe by entering the North Macedonian market in June, taking the Pepco brand to 19 countries overall.

This renewed focus on continental Europe follows the company's sale of its struggling British Poundland business in June.

In the 25 weeks to March 22, almost the first six months of the fiscal year that started in October, group revenue increased 3.7% on a constant currency basis.

Pepco said the process of divesting Dealz was on track to be completed during the current financial year, while it continues expanding its namesake brand in Europe.

(Editing by Milla Nissi-PrussakEditing by Rod Nickel)

((Adrianna.Ebert@thomsonreuters.com; +48 58 769 65 88;))