Poundland has pushed the button on its IPO. The single-price retailer has bolstered its board and could achieve a valuation of up to £700m.

Poundland has pushed the button on its IPO. The single-price retailer has bolstered its board and could achieve a valuation of up to £700m.

There is nothing cut price about Poundland’s financials. Sales have grown from £641.5m in the year to March 2011 to £880.5m in its 2013 financial year. Underlying EBITDA has increased at a faster rate than revenue – up from £31.1m in 2011 to £45.5m in 2013.

And the board it has hired is second to none. Chairman Andy Higginson has pulled in names such as former Carpetright chief executive Darren Shapland and Mondelez president and chief customer officer Trevor Bond.

While much has been made of Shapland’s short stint at Carpetright, it should be remembered that he spent six years at Sainsbury’s as finance boss and, along with the grocer’s incoming boss Mike Coupe, was touted as a potential successor to Justin King.

Poundland is making much of its scale. It says it has twice as many stores as its nearest competitor in the UK and is gunning to double its portfolio to 1,000 shops after the float. International expansion is also planned.

In terms of customer loyalty though, it must struggle a little. Will its customers really care if they are in a Poundland, a Poundstretcher or a B&M Bargains? Possibly the best located stores on the high street will win the custom. You could assume that’s why Poundland has such an aggressive store expansion target.

However Poundland will benefit from being part of one of the sexy sectors at the moment. As Poundland boss Jim McCarthy says, the value retail sector has been through a period of profound change in scale, customer perception and financial performance over the past few years. Just as shopping at Aldi or Lidl is now acceptable and even boasted about by some consumers, shopping in discount stores is now mainstream.

Poundland is not alone in its IPO ambitions. B&M Bargains – chaired by Higginson’s former boss Sir Terry Leahy – is also considering a float and there are several other retailers, such as Pets at Home, likely to confirm their intentions soon.

Poundland could benefit from being the first of the discounters to go to market, but soon investors will have their pick of retail businesses to invest in. Poundland will likely look to the US for investment where many single-price retailers are listed, and the model has clearly made money for its investors.

Poundland, and the discount sector, has been transformed in recent years. Now potential shareholders will consider how many pennies and pounds a publicly quoted Poundland might add to the value of their investments.