Poundland reveals £1bn sales as European expansion and click-and-collect trials get underway

Discount retailer Poundland has reported a 13 per cent rise in sales as it kicks off its European expansion with a store opening in Torremolinos yesterday (2 July).

The retailer, which floated on the stock market earlier this year, reported pre-tax profits for the year ended 30 March of £36.8m, up 23.5 per cent from last year, as its CEO Jim McCarthy hailed a “transformational year”.

Poundland opened 70 new stories in the UK over the period in addition to its new Spanish offering, called Dealz, with a plan to open an initial 10 stores in the country over a two-year period.

The retailer, which sells products at single price point of £1, made an underlying pretax profit of £36.8m in the year to 30 March, up 23.5 percent, while pretax profit dropped 18.9 per cent to £21.5m.

Speaking on a conference call to investors this morning, McCarthy eschewed suggestions that supermarket pound aisles would have a negative effect on the company.

“It’s not a new phenomenon, Tesco have been doing single price since 2009 and Asda have been doing it for years… it’s been repackaged and the supermarkets are re-modelling so to speak. It’s early days of course but since the noise has occurred it doesn’t seem to me that the discount channel has slowed down and in terms of single price our like for like [sales] have been strong.

“However we’re not complacent, we’re very much focussed on delivery value and we watch what’s going on. The shopping experience in Poundland is different… I’m sure they’ll settle on a model that suits them and their customers.”

He added that where Poundland couldn’t compete, it would simply “de-list” a product.

The company also plans to trial a click-and-collect service via its new e-commerce site, which Poundland chief financial officer, Nick Hateley, said would be operated from a central warehouse rather than individual shops to avoid having to substitute products that are unavailable. It is hoped the service will begin in 2015.

McCarthy added that the results of the trial period and consumer demand would determine whether collection will take place in-store or via lockers at locations such as train stations.

Poundland also hinted that it may look to introduce higher priced, ‘conditional spends’ after seeing success in Northern Ireland last Christmas when it introduced a bundle of items for £10.

“We are absolutely committed to the single price in Poundland and so the preservation of that is really important, however we tested last Christmas in Northern Ireland some conditional spends – so spend £10 and you could get product A, B, C at a remarkable price and theses are products that would normally be £20.”

“We sold out, so as you can expect form that learning… they [customers] can be led into a higher purchase via qualifying though a conditional spend and we’ll be doing more of that.”

Shares in Poundland rose more than 4 per cent to 344p.

Get The Drum Newsletter

Build your marketing knowledge by choosing from daily news bulletins or a weekly special.