Poundland chief executive Jim McCarthy said yesterday its Dealz chain “could be bigger” in Europe than its sister chain in the UK, after kicking off its expansion by opening its first store in Spain on Wednesday.
The company, which reported a 23.5 per cent jump in annual profits yesterday, said 2,700 people came to its new store in the holiday resort of Torremolinos on the first day of trading, with Red Bull and Toblerone among the most popular items.
McCarthy said it planned to open 10 pilot stores over the next two years and might roll out further shops in Spain and in other European countries.
The move forms part of its plans to double the UK presence to 1,000 stores by 2020 and open 60 new shops this financial year, including 10 Dealz-branded shops in Ireland, where it now has 41 since launching in 2011.
Poundland, which joined the first wave of firms to float this year, has benefitted from a boom in the popularity of discount retailers, with consumers sticking to cautious spending habits picked up during the recession.
Underlying profits totalled £36.8m in the year to 30 March, compared with £29.8m the previous year.
Total sales rose 13.3 per cent to £997.8m as it opened 70 stores, taking its estate to 528. Sales climbed a further 18 per cent to £262.6m in the first quarter of Poundland’s new financial year.
The retailer also said it hoped to launch an online store in the second half of this year as well as a click and collect service in its stores.
Shares rose four per cent to 341.9p, above its March float price of 300p.
PROFILE: JIM MCCARTHY
Poundland’s long-serving chief executive Jim McCarthy was in a jolly mood yesterday as he met with journalists at JP Morgan’s offices at Blackfriars. His jovial demeanor has undoubtedly been given an extra lift by Poundland’s successful £750m float in March.
Shares were in such demand that the offer was 15 times oversubscribed. With the IPO out of the way, McCarthy talked excitedly about the group’s growth prospects, describing the UK as “the powerhouse” and the firm’s first priority followed by Ireland and Spain.
But as well as planning and opening new stores, Poundland is also aiming to launch more own-brand, higher-margin products such as jewellery and “indulgent snacks” like peanuts, which generated £10m sales for the business last year. McCarthy shrugged off competition from Aldi and Lidl , saying their shoppers were on a different “shopping mission” and that its position as a “variety” retailer would serve it well as the industry underwent huge structural change.