The chain currently operates 73 branches in Austria with 600 employees.
The company has a significant stock of goods in its branches, which were delivered without any retention of title. The company’s management believes that a short-term continuation of operations to sell off goods could be a viable option as part of their strategies for the best possible use of the debtor’s inventory. The further steps will be discussed with the insolvency administrator to be appointed, aiming to provide him with the best possible support in making the decision on the winding up,” as stated in the bankruptcy application.
The company in question is Pepco Austria GmbH. It has filed for bankruptcy proceedings, as per the reports from Credit reform. The insolvency impacts just over 600 employees and around 300 creditors. Business activities in Austria are expected to cease according to KSV1870.
The background
The company was established in 2020 as part of the Pepco Group’s market entry in Austria. This was followed by a comprehensive market entry with numerous branch openings throughout Germany in 2021. In the years 2022 and 2023, there was a concerted effort from the group and the local management to increase market shares in Austria’s discount sector, with the aim of scaling sales revenue sustainably.
Despite the implementation of financial and earnings measures that initially showed success, primarily due to synergies as a result of the company’s integration in the Pepco Group, the company was ultimately unable to increase sales at a rate that would have been necessary for a positive earnings situation. The company’s losses have been entirely absorbed by the ongoing support from the group since entering the market.
Ultimately, the Pepco Group decided not to provide the Austrian subsidiary with any further financial resources. As a result, the company is no longer able to maintain liquidity from its operational business.
Debts and assets
Creditreform estimates the balance sheet loss at 43.75 million euros and the liabilities at 72.12 million euros, of which 65.81 million euros are liabilities to affiliated companies. Current assets are valued at 10.93 million euros, with 4.069 million euros attributable to inventories and 6.71 million euros to free bank and cash balances.
The Pepco Group
The Pepco Group, to which the company belongs, is a European retail group that commenced its operations in Poland over 20 years ago. As of the end of 2023, the Pepco Group operates 4,629 stores in 21 European countries. The company currently operates 73 branches in Austria, selling a wide variety of products, including clothing, household products, decorative items, toys, pet supplies and sporting goods. The product range is regularly adjusted according to the season and current trends.
The goods are offered at affordable prices to provide customers, especially families, with easy and affordable access to everyday necessities. The company purchases its goods exclusively from the Polish sister company Pepco Poland Sp. zoo. Logistics is managed at a group level and branch deliveries are made directly to the company’s individual branches. There are no “interim storage facilities” attributable to the company. The brands of the products sold by the company are licensed by the group.
