Outgoing Poundland boss Jim McCarthy has blamed the “disruption” caused by the acquisition of 99p Stores for a sharp fall in profits.
McCarthy, who steps down at the end of this month, told Retail Week that “hundreds” of staff had to work on integrating 99p Stores.
“We took our eye off the ball,” he admitted. “The disruption caused was very significant.”
Earlier today, Poundland posted an 83.7% drop in annual pre-tax profits, while like-for-likes slipped 3.9%. Stripping out the 99p Stores acquisition, profits fell 13.5% to £37.8m.
It comes after it emerged yesterday that South African retail giant Steinhoff is considering a takeover approach for Poundland.
Since the acquisition of 99p Stores completed Poundland has been converting the vast majority of the shops to the Poundland fascia. The retailer is also trialling a new multi-price format – Poundland & More – at some of 99p Stores’ Family Bargains sites.
McCarthy, who will make way for former B&Q boss Kevin O’Byrne after a decade in charge at the value retailer, also blamed currency exchange movements and “changing shopping habits”, with the shift to online and drop in high street footfall.
Poundland has begun trialling its own ecommerce site, but it is likely to remain a small part of the business owing to the economics of running an ecommerce offer.
He also highlighted competitors increasingly encroaching on its territory. He pointed to the example of McVitie’s biscuits, which he said were being sold at many other shops for £1.
Looking ahead, McCarthy, who has spent about 40 years in retail, said he expects the 20 next years to be “the most exciting and most challenging” ever in retail. “The stronger will get stronger and the weak will fall by the wayside,” he said.
However, McCarthy has said this will be his last frontline positon in retail.
McCarthy declined to comment on the news this week that South African retail group Steinhoff was mulling a takeover bid of the value retailer.
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