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Poundland profits rise as Brits’ thrifty habits continue Poundland postpones online plans despite growing sales and profits
(about 4 hours later)
Poundland’s boss said he was confident about the company’s first Christmas as a public company as the budget retailer capitalises on the post-recession thriftiness that is transforming Britain’s retail market. Poundland has dumped plans to launch an online store in time for Christmas as it concentrates on opening new shops and widening its product range to entice in more shoppers.
Jim McCarthy said pre-Christmas sales of cards and wrapping, confectionery and batteries were strong and that customers had reacted well to Poundland’s festive range. Poundland makes about half its profit in the final three months of the calendar year. The retailer’s boss Jim McCarthy said he still believed the idea was feasible but admitted “we are not putting a timetable on it.”
“We had a good Christmas last year and we plan for a good Christmas this year,” McCarthy said. “Takeup from customers has been good so we are pretty confident about it.” “It will be delivered at some point in the future. When we do it we want it to be done properly and make sure it’s attractive and sustainable,” McCarthy said. Poundland’s move comes after fellow budget retailer Primark concluded that it could not trade profitably online while poundshop.com, an online store started by Poundland founder Steve Smith, ran into difficulties.
Boxes of Just Brazils, three-packs of Nestle Walnut Whips and the chain’s own-brand makeup are all selling well, McCarthy said. Pretax profit for the six months to 28 September increased by 11.7% to £9.3m as sales at stores open a year or more rose 4.7%. Profit excluding one-time items surged by 34% to £12.6m on total sales up 15% to £528m. Poundland is rapidly opening stores as the budget retailer capitalises on the post-recession thriftiness that is transforming Britain’s retail market.
Poundland was one of a series of retailers that joined the stock market in a frenzy of new listings early this year. Its shares fell below their 300p float price in May but have since edged back into positive territory. The shares rose 3% to 319p. Strong sales of the chain’s own-brand makeup and Jane Asher branded bakeware helped lift sales at stores open a year or more by 4.7% for the six months to 28 September boosting pretax profit by 11.7% to £9.3m. Profit excluding one-time items surged by 34% to £12.6m on total sales up 15% to £528m.
McCarthy said he was confident about the company’s first Christmas as a public company as sales of cards and wrapping, confectionery such as Just Brazils, Nestle Walnut Whips as well as essentials such as batteries were strong. Poundland makes about half its profit in the final three months of the calendar year.
“Takeup from customers has been good so we are pretty confident about it.” he said.
However McCarthy warned that underlying sales growth was likely to be harder to find in the coming six months than the last half year, which was flattered by good weather and the timing of Easter. “It will be tougher in the second half. Other people are trying very hard to have a good Christmas. Our proposition is really good but it is too early to call,” he said.
Poundland, which sells all its products for £1, is gaining from hard-pressed consumers shopping around and turning to value retailers they would not have considered before the recession. The trend is shifting power on the high street, most noticeably as Aldi and Lidl take business from the big supermarkets.Poundland, which sells all its products for £1, is gaining from hard-pressed consumers shopping around and turning to value retailers they would not have considered before the recession. The trend is shifting power on the high street, most noticeably as Aldi and Lidl take business from the big supermarkets.
McCarthy said upmarket consumers were increasingly shopping at Poundland, whose makeup was reviewed by Vogue, and that manufacturers were keen to produce products to meet its pricing requirements. It launched its first celebrity-linked products this year by teaming up with Jane Asher for a bakeware range. Poundland was one of a series of retailers that joined the stock market in a frenzy of new listings early this year. Its shares fell below their 300p float price in May but have since edged back into positive territory. The shares rose 3% to 319p.
“The [discount] sector is performing strongly and other parts of the retail sector less so. That is about consumer behaviour. Increasingly consumers have been pleased to buy products that previously they were paying more for at other retailers and we think Poundland is positioned to take advantage of those changes in consumer shopping behaviour.” McCarthy said upmarket consumers were increasingly shopping at Poundland, whose makeup was reviewed by Vogue, and that manufacturers were keen to produce products to meet its pricing requirements. It launched its first celebrity-linked products this year by teaming up with Jane Asher for a bakeware range. The baking goods have sold so well that Poundland is now looking for other celebrity partners and hopes to sign at least one next year.
Poundland plans to open 60 stores in the UK and Ireland this year and to expand its Dealz operation in Spain, where soaring unemployment has left consumers short of cash. Meanwhile Poundland plans to open 60 stores in the UK and Ireland this year, taking its total to more than 600 and to expand its Dealz operation in Spain, where soaring unemployment has left consumers short of cash.