Profits roll in at Poundland

Poundland chief executive Jim McCarthy
Poundland chief executive Jim McCarthy
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Poundland’s popularity with a penny-pinching public extended to investors yesterday as the discount chain unveiled a maiden shareholder dividend and surge in profits.

The firm, which has 556 stores in the UK and Ireland, also stuck by its long-term plans for 1,000 outlets, adding that it expects “to see many years of future growth”.

Its half-year results beat expectations as total sales jumped 15 per cent to £528.2 million, with like-for-like sales up 4.7 per cent in the 26 weeks to 28 September. Underlying pre-tax profits jumped by more than a third, up 34.2 per cent at £12.6m.

During the period, the firm launched its first celebrity-endorsed product range, called Jane Asher’s Kitchen, of cake mixes and baking accessories.

It has also launched a jewellery range, called Purple Ivy, and a Make-Up Gallery cosmetics range over the last six months.

Chief executive Jim McCarthy said: “In addition to strong trading in the UK, our international expansion plans are well underway with three multi-price Dealz stores now open and trading well in Spain.

“While our full-year outcome, as always, is dependent on delivering a good Christmas for our customers, I remain confident of further progress throughout the year.”

The business said it generates around half of its earnings in the third quarter of its financial year, which includes the key Christmas period.

It added it attracted a broad range of shoppers, with around 54 per cent in the top ABC1 professional social category.

The firm said it was benefiting from a change in consumer behaviour, where people shopped more often and compared prices online. It said: “The transparency of our single price offer continues to serve us well.”

The growth is being supported by a third, purpose-built distribution centre, at Harlow, extending to some 350,000 square feet, which opened in September.

Poundland said it looked forward to the second half of the year with confidence.

The group listed on the London stock market earlier this year and sells goods such as Cadbury’s chocolate and Fairy washing-up liquid for £1. It opened its first store in Burton-on-Trent in 1990.

Investors will receive a maiden interim dividend of 1.5p a share. Last month Tesco slashed its payout by 75 per cent, while earlier this month Sainsbury’s signalled a lower full-year dividend. Both have cut their capital expenditure plans for new stores.

Discounters continue to gain in popularity in Britain even though the economy has picked up traction, as habits formed in the downturn stick. Discount grocery chains Aldi and Lidl grew sales by 26 per cent and 17 per cent, respectively, over the last three months, according to industry data published last week.

McCarthy added: “We’re a central pillar now of the discount market in a fast changing retail environment.”


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