POUNDLAND’S owner has revealed annual profits slumped by more than a third as expansion and higher costs took their toll, but said it was “cautiously optimistic” for the year ahead.
Pepco Group, which owns the Pepco and Dealz brands in Europe and Poundland in the UK, posted a 35.8% constant currency drop in reported pre-tax profits to €147 million (£126 million) for the year to September 30.
Chief executive Andy Bond said the result was “disappointing” as the cost of opening another 668 stores across the group, as well as inflation and interest rate pressures, offset record sales of €5.6 billion (£4.8 billion), up 17.7%
Poundland’s like-for-like sales lifted 5.6% over the year, but Pepco said trading since the start of the year financial year had been “mixed” across its brands, with overall group comparable sales down 3.1% in the eight weeks to November 26.
Poundland sales are “slightly above” year-on-year as weaker clothing sales drag on the overall performance, according to the group.
Poundland to roll out chilled and frozen sections in half its NI stores
Pepco said: “While we expect the challenging trading conditions outlined above to continue in the near term, we are cautiously optimistic as we enter 2024.”
In July, with the price of cupboard essentials at an 18-year high, Poundland made what it says is a “significant move” to reduce the price of many big brand family favourite products back to a £1 price point.
It launched ‘Operation Sell for Less’ across its 800-plus UK stores - which includes more than 40 in Northern Ireland - to pass on the benefit of lower costs to customers.
Mr Bond said the group was taking action to slow store openings and address higher costs to boost its bottom line.
He added: “While we expect industry-wide short-term sales challenges to continue, we are cautiously encouraged by recent third-party data pointing to an expected easing of certain pressures on household budgets, particularly in Central and Eastern Europe.
“We also continue to expect gross margin recovery throughout the year, and are already seeing encouraging signs here.”
The firm also confirmed that it has now opened 64 former Wilko stores under the Poundland brand.
It struck a deal in September to buy up to 71 Wilko stores from administrator PwC following the collapse of the high street chain.
“The integration of Wilko stores into the Poundland brand provides the group with an exciting opportunity to accelerate the new store pipeline in the UK, with no additional central cost base increase,” the group said.
