Budget retailer Poundland has recorded an 18.6 per cent surge in underlying profits, earning £43.7m for the year to 29 March on the back of £1.12bn in sales.
The healthy results come as Poundland mounts an aggressive expansion drive with the purchase of 99p Stores, with a final decision expected from competition authorities in October.
Statutory pre-tax profits were even higher, fuelled by one-off factors such as the loom band craze which fuelled a 68.3 per cent rise to £36.2m for the year.
Paul Thomas of the retail consultancy Retail Remedy said: “Such blistering rates of growth are the sort of thing the mainstream supermarkets can only dream of. Poundland clearly didn’t get the memo about price deflation and squeezed margins.
“The chain’s beguilingly simple price proposition remains as appealing as ever, with like-for-like sales increasing at a steady clip even as it aggressively expands its number of stores.
“With their marketing focusing on quality, Aldi and Lidl have so far proved less of a threat to Poundland than they have to the Big Four grocers. But this is likely to be only a temporary truce. The German discounters’ growing firepower could soon be turned on Poundland. And after having things its own way for so long, this is may prove one of the toughest tests of Poundland’s defences in its 25 year history.
“With this threat just over the horizon, Poundland's planned acquisition of 99p Stores – which would bring a 50% increase in the number of stores – risks being an overextension.”
Poundland currently has 588 stores in the UK and Ireland and plans to open an additional 60 outlets over the current year.