Credit: Ardfern/Wikimedia

Is Poundland's time in the sun coming to an end?

The discount retailer's shares dropped after it revealed growth had slowed.

by Jack Torrance
Last Updated: 02 Mar 2016

Poundland's first year as a PLC has been far from uneventful, but until now it's mostly been positive news. The discount retailer, which sells everything from razor blades to Coca Cola and DIY products – all for £1 each – broke through the £1bn annual sales mark back in April, and its planned takeover of rival 99p Stores, though facing regulatory meddling, looks set to go ahead.

But today shareholders showed their dissatisfaction as the company revealed its growth was slowing. Sales in the 11 weeks to 14 June were up 3.5% - not bad for most PLCs but not a patch on the 18% jump it experienced in the same period last year.

What's more Nick Bubb, the respected retail analyst, tweeted that Poundland's like-for-like sales figures were down a more worrying 4.5% (it's unclear to MT where this figure comes from). That's not great, but it's not necessarily as bad as it sounds. Poundland's been opening stores at a pretty rapid rate lately (six in the past three months) so it's perhaps to be expected that it's cannibalising its existing customers.

Read more: MT's cover interview with Poundland CEO Jim McCarthy

Poundland's bosses seemed unconcerned though, highlighting its strong annual sales figures for the year to 29 March, which were up 11.4%. 'Notwithstanding a challenging start to the year, I expect to see a year of growth for Poundland as we have a very strong opening programme and we will continue to be the standard bearer for genuine and amazing value on the UK's high streets and retail parks,' said CEO Jim McCarthy.

Investors are looking a little less optimistic. Poundland's shares fell as much as 6% in early morning trading before rising to around 301p, 3.25% down on yesterday's closing price. That's well down on the 418.9p they peaked at back in February.

Today's trading update was accompanied by the news that Poundland's trading director Richard Lancaster has been poached by the Co-operative to go and run its funerals business. McCarthy will be hoping that's not an ominous sign of where the rest of his company is headed.

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