Poundland cautious despite 30% Q3 sales jump
SINGLE price retailer Poundland has reported sales growth of almost 30% for its third quarter but in line with the sector in general, it has warned declining customer numbers are likely to hit full year profits.
The Q3 performance was boosted by the inclusion of figures from its £55m acquisition of the 99p Store group, which completed in September following a protracted process slowed by inquiries from the Competition & Markets Authority.
However, the Black Country-based group has said that due to declining customer numbers during November – a trend which continued into December – pre-tax profit for the year to March 2016 is likely to be at the low end of expectations.
In a Q3 market update, it said: “The range of market expectations for pre-tax profit for the financial year ending March 2016, excluding trading losses from the combination of 99p Stores and converted stores, and before any non-underlying costs relating to Spain and the acquisition and integration of 99p Stores, is £39.8m to £45.8m. Consensus is for pre-tax profits of £42.6m.”
It added: “Q3 trading was volatile. Whilst our Christmas and Halloween product offer was our strongest ever and December saw an improvement in sales growth, UK high street footfall remained below last year and this has impacted our overall sales growth.”
In addition to the investment in 99p Stores, the group is also expanding its European operation, where it trades as Dealz. This has seen the opening of new stores in Ireland while it is also trialling the Spanish market.
Total revenue in Spain was £4.5m during the period (2014: £2.3m), with constant currency growth of 121.9% and actual currency growth of 102.1%.
Therefore, total Q3 group revenue, excluding Spain, was £424.9m (2014: £328.4m).
Jim McCarthy, chief executive, Poundland, said: “Trading conditions that we experienced in November continued through the third quarter, with high street customer numbers down year on year and this has impacted sales growth.
“I am very encouraged by the sales uplifts of converted 99p Stores and by the speed and efficiency of the conversion process. I expect the store conversion programme to be substantially complete by the end of April and still expect to generate incremental EBITDA of at least £25m from the transaction.
“In addition, we remain on track to open around 70 net new Poundland and Dealz stores in the UK and Ireland in the full year.”
