THE ECONOMY may be improving, but Poundland’s booming popularity is proof shoppers are sticking to recession-born habits of seeking out a bargain, the company said as it posted a jump in first-half profits.
The value retailer enjoyed a 34.2 per cent rise in pre-tax profits to £12.6m in the six months to 28 September, beating analysts’ forecasts, on sales up 15 per cent to £528.2m. Like-for-like sales were up 4.7 per cent.
Like discounters Aldi and Lidl, Poundland has been gaining more traction among the cash-conscious middle class by launching more own-brand, higher-margin products. More than one in five Poundland shoppers are in the AB customer bracket.
Chief executive Jim McCarthy said its new Makeup Gallery range launched last month had almost sold out on launch and even won the seal of approval by Vogue and the blue-blood bible Tatler on its TV show this week.
“We were going to roll out the range to all of our stores, but had to limit that to 300 [shops] because it exceeded our purchasing plan and that’s a great place to be,” McCarthy told City A.M.
The group is also growing its store estate at an aggressive pace to capitalise on the continuing change in shopping habits in favour of discounters. It grew its UK and Ireland store base to 556 in the first half, opening a net 28 stores and sees scope for as many as 1,000.
The majority of those were in retail parks, which McCarthy said outperform the high street because access and parking meant shoppers spend more.
The Christmas quarter is a crucial period, accounting for 50 per cent of earnings. But McCarthy expects another successful Christmas ahead.