- Half-year pre-tax profits slip 26% to £9.3m
- Like-for-likes fall 2.8%, but total sales up 5.6%
- UK & Ireland store target increased to 1,400
- Expects £25m incremental earnings from 99p Stores deal
Poundland has blamed higher costs and currency movements for the 26% dive in its underlying half-year profits.
The value retailer said it was also trading against tough comparables, which meant earnings in the six months to September 27 fell 26.3% to £9.3m.
Like-for-likes in the period slipped 2.8%. However, on a constant currency basis sales rose 5.6%.
Poundland also warned it has experienced “volatile” trading conditions in the third quarter. Chief executive Jim McCarthy said: “The quarter’s performance therefore depends more than ever upon the last six weeks’ trading towards Christmas.”
The retailer said last year’s first half was an “exceptional period” due to a late Easter and the loom bands craze. This year it said it had also been hit by higher “pre-opening” costs, as 52 net new stores have been opened. Its UK and Ireland store estate now totals 640.
In the period, the retailer completed its acquisition of 99p Stores and said it has already identified £25m of incremental earnings. The “vast majority” of 99p Stores will be converted to the Poundland fascia by next April. It has also raised its overall store target from 1,070 to 1,400 in the UK and Ireland.
McCarthy said sales from the first converted 99p Stores were “very encouraging”.