Adds comments from CEO in paragraphs 6 to 8

By James Davey

LONDON, Dec 10 (Reuters) - European discount retailer Pepco Group PCOP.WA will examine "every strategic option" for its struggling Poundland business in the UK, the group's new CEO said on Tuesday.

"It is important to look at every strategic option for this company to bring it back on track," Stephan Borchert told Reuters after the group booked a 775 million euros ($816 million) non-cash impairment charge for variety store chain Poundland because of its weak performance and outlook.

Poundland trades from 836 stores and contributes about 30% of Pepco Group's total revenue.

Asked if Poundland would stay in the group, Borchert said he would say more on the group's strategy and on Poundland when he hosts a Capital Markets Day on March 6.

Poundland's like-for-like sales fell 3.6% in its year to Sept. 30, while underlying earnings slumped 21.5% to 153 million euros.

Borchert said Poundland "continued to face headwinds" in its new financial year, with sales declines in clothing and general merchandise following the transition to Pepco-sourced product ranges at the start of the year.

“With the transition to the Pepco ranges I think the business lost a bit of its DNA, so we are working now as a team there to bring this back," he said in an interview.

He highlighted the reintroduction of more products priced at one pound, which reflected a return to Poundland's heritage.

The CEO also said the new UK government's tax-raising budget in October would mean additional costs in the "lower double digit" millions of pounds for the group.

($1 = 0.9499 euros)

(Reporting by James Davey; Editing by Sachin Ravikumar and Bernadette Baum)

((james.davey@thomsonreuters.com))