Discount brands are continuing to enjoy a boom in sales despite the end of the recession bringing with it increases in disposable income and a drop in inflation. This has seen brands such as Aldi, Lidl and Poundland invest in new store openings throughout the UK, with the latter particularly benefiting from an expansion in its commercial property portfolio.
Poundland saw sales rise by 13.3 per cent in the financial year to the 30th of March, with the £997.8 million total sales result comparing extremely favourably to the £880.5 million total in the 2012-2013 financial year. This, the retailer claims, contributed to a good underlying profit performance, which was further enhanced by a well-managed margin and a tight control on operating costs.
Since opening its first store in 1990, Poundland has expanded its store portfolio significantly and now operates more than 500 outlets in the UK and Ireland – making it Europe’s largest single price value general merchandise retailer based on sales and store numbers. During the last financial year, the chain opened 70 net new stores and intends to continue to grow for the foreseeable future.
Chief executive officer for the brand, Jim McCarthy, believes that Poundland is in a strong position to benefit from the upturn in the consumer financial situation.
He says; “Poundland delivers amazing value to our customers every day and millions of them, across the UK and Ireland, are voting with their purses and wallets every week.
“As a result of this support from our customers, we have achieved another record profit performance across the group, with our store opening programme on track, underlying profits in line with market consensus and good cash generation.
“Looking ahead, we will continue to manage the business tightly while investing in clear opportunities for future growth – we are confident in making further progress in the new financial year.”
Like many other British retailers, Poundland has now decided to set its sights on international expansion. Therefore, as well as intending to open 60 new stores per annum in the UK and Ireland, the brand wishes to explore options overseas and establish ten trial stores in Spain over the next two years.
With discounters enjoying their moment in the sun, it seems that low pricing may be the new norm for retailers struggling to compete with brands offering strong value for money incentives. However, with wage growth now outstripping inflation for the first time in several years and supermarkets investing heavily into lowering prices for consumers, the question is whether discounters can continue their stunning success.
