Poundstretcher has returned to profit for the first time since 2005 after a restructure and a cost reduction exercise.
Chief executive Aziz Tayub is running the business currently after the departure of managing director Charles Kay.
Retail Week understands that Kay, who took on the role at Poundstretcher in January, left four months ago and has not been replaced. Kay joined from Netto where he was managing director.
Poundstretcher has bounced back into the black, posting pretax profits of £1.4m in the year to April 2, against last year’s loss of £7.1m.
However, turnover dropped from £328m to £308m.
The discount retailer has been striving to revamp itself after years of posting losses and declining sales in a value sector where rivals have been flourishing.
It has been rebranding all its Instore shops to Poundstretcher to ensure clarity for the customer, and in the past 12 months has undergone a restructure across field management.
In documents filed at Companies House, Poundstretcher said that “a number” of other head office departments had also been revised. It is not known if Kay’s departure is linked to the restructure.
Poundstretcher has also cut costs by adapting its supply chain, sourcing more products direct from the Far East.
It has been working to refine its product range, developing gardening and outdoor living products in addition to existing food and toiletry products.
The director’s report stated: “Management is encouraged by aspects of the company’s performance and the return to modest profitability re-enforces its belief that the actions being taken are the correct ones to ensure the company’s longer term viability and prosperity.”
Poundstretcher said the trading environment is “extremely challenging” and it is focusing on controlling shrinkage costs for the new financial year, which “remain unacceptably high”.
Other discount retailers such as Poundland and 99p Stores have seen a boom in trading in recent years as cash-strapped consumers trade down in the downturn.
Despite the difficult market conditions, the retailer has opened 26 new stores but closed eight, taking the total estate to 354.
Poundstretcher acquired 15 of the 17 Alworths stores that were closed after the ‘son of Woolies’ chain went bust this year, as revealed by Retail-Week.com.
Poundstretcher is looking ahead to the Christmas trading period to boost the company’s performance, which it is “heavily dependent on”. It added: “It is crucial this period is both planned and executed well.”
Poundstretcher declined to comment.