99p Stores pre-tax losses ballooned prior to Poundland takeover

99p Stores’ losses swelled in the year ending January 2015 following a £734,000 loss the previous year.

According to documents filed at Companies House, sales dropped 2.5% to £361.3m during the 12-month period.

Poundland struck a £55m deal to acquire 99p Stores last February, closing the deal in September following an investigation by the Competition and Markets Authority.

The takeover added 251 99p Stores to Poundland’s existing 547-store portfolio as it presses on with ambitions to operate 1,000 shops across the UK.

But 99p Stores’ financial figures reveal that the chain was in trouble ahead of the acquisition.

The Lalani family, which founded the business in 2001, is now expected to receive less following the takeover in reflection of the poor trading.

The Lalanis were initially poised to pocket £47.5m plus a stake of about 1% in Poundland as part of the deal.

Poundland is in the process of converting all of the 99p Stores and rebranding them under the Poundland fascia. It has estimated that the acquisition will boost earnings by £25m.

Poundland’s half-year pre-tax profits slumped 26% to £9.3m as like-for-like sales fell 2.8%.

Boss Jim McCarthy admitted he was also disappointed with trading during the Christmas period, after high street footfall “remained below last year” and impacted sales growth.