Poundland gears up for flotation with high profile board appointments
BLACK Country-based discount retailer Poundland Group has announced its intention to proceed with its flotation on the London Stock Market.
It has now launched a charm offensive to try and persuade institutional investors of the value of the business. Proof will be seen once full details of the initial public offering (IPO), which is likely to be next month.
In connection with the IPO and in an attempt to impress investors, the company has also announced a number of high profile non-executive board appointments.
These see the recruitment to the business of former Carpetright CEO and Chief Financial Officer to Sainsbury’s, Darren Shapland, President and Chief Customer Officer of Cadbury owner Mondelēz International – part of Kraft Foods, Trevor Bond, Group HR Director for Merlin Entertainments, Tea Colaianni and former Travelodge CEO, Grant Hearn.
The board is chaired by former Tesco Finance and Strategy Director, Andrew Higginson.
Willenhall-based Poundland is the largest single price value general merchandise retailer in Europe by both sales and number of stores. It opened its first store in 1990 and has grown to operate a network of over 500 stores across the UK and Ireland.
Stores are located in convenient locations, typically with high footfall, across a mixture of high streets, shopping centres and retail parks. The group offers a wide range of products across different categories with a mix of branded and own-label products in a business model akin to the old Woolworths, except for its rigid pricing structure.
It has highlighted to institutional investors its great potential, highlighting the fact the business is the UK market leader in a growing sector and that it has more than twice as many stores as its nearest single price competitor in the UK.
The business has grown considerably in recent years and CEO Jim McCarthy has said that even once the economic recovery takes holds, consumers which have grown accustomed to bargain shopping in recent years will remain loyal to the brand.
In its announcement to the LSE it said its customer proposition appealed to a broad range of shoppers, with approximately 22% of its UK customers now coming from the AB socio-demographic group, a result based on a survey it carried out last year.
It also highlights that it has built up a high quality national store estate that delivers consistently strong returns across all formats and regions.
It said its stores matured rapidly and the average pay-back for a new Poundland store was only around 12 months.
“The directors believe that there are significant opportunities to continue to expand the existing store estate and that there is potential for more than 1,000 Poundland stores in the UK,” it said.
Revenue grew from £641.5m in the 52 weeks ended March 27, 2011 to £880.5m in the 2013 financial year – a Compound Annual Growth Rate of approximately 17%. For the 39 weeks ended December 29, 2013 revenue amounted to £758.3m.
Underlying EBITDA has increased at a faster rate than revenue, growing from £31.1m in the 52 weeks ended March 27, 2011 to £45.5m in the 2013 financial year – CAGR of approximately 21%. For the 39 weeks ended December 29, 2013 underlying EBITDA amounted to £45.2m.
It said its successful entry into the Irish market with the launch of Dealz in September 2011, demonstrated its ability to expand into new territories. Dealz was profitable in its first year of operation.
McCarthy said: “The value retail sector has been through a period of profound change in scale, customer perception and financial performance. The sector is now a mainstream feature of the UK retail market and Poundland has been a central architect of that change. Our single price point and our amazing value are appealing to an increasingly broad section of shoppers with 22% of our UK customers now coming from the AB demographic.
“We have built a track record of delivering strong, profitable growth and I believe we have many more opportunities ahead, underpinned by our trusted brand, strong supplier relationships, differentiated value proposition and our well-invested and scalable infrastructure.
“Our success in Ireland – where we trade under the Dealz fascia – demonstrates that we have the capability to generate positive financial returns in new geographies quickly and underlines the potential in the business for further international growth in addition to our plans for continued rapid growth in the UK.”
Immediately following completion of the offer, it is expected that the company will have a free float of at least 25% of its issued share capital.
It is expected that admission will take place in March and that following this, the company will be eligible for inclusion in the FTSE UK indices.
