Expanded Poundland reveals big lift in sales

Poundland was doing its level best to impress the market with its sales figures this week, following its disastrous interim results in November, when its share price fell off a cliff.

The single price-point retailer updated the market on its third quarter trading on Thursday, citing strong sales growth across its operations - for the 13 weeks ended 27 December 2015 - the first period to include the newly-acquired 99p Stores chain.

Poundland said total sales in third quarter, excluding its 10-store Spanish trial but including 99p Stores, grew by 29.4%.

On a constant-currency basis, sales were up by 30.1% (also excluding Spain), with 99p Stores taking credit for 21.1 of those percentage points.

Of the 9.0 percentage points of growth attributed to Poundland, 3.0 percentage points were from rebranded 99p Stores.

"Total sales in the third quarter increased ... and our Christmas and Halloween ranges were out best ever", said Poundland chief executive Jim McCarthy.

"However, the trading conditions that we experienced in November continued through the third quarter, with high street customer numbers down year-on-year and this has impacted sales growth."

McCarthy indicated the retailer was still expecting pre-tax profit for the full year to be towards the lower end of market expectations, which was between £39.8m and £45.8m.

Its Spanish trial was also growing, with total revenue of £4.5m being almost double 2014's £2.3m.

Looking ahead, Poundland said it opened a net 14 new stores in the UK and Ireland during the quarter, as well as converted 25 99p Stores to the Poundland banner, taking its numbers to 628.

It also said there were 227 stores remaining in the 99p Stores estate.

"I am very encouraged by the sales uplifts of converted 99p Stores and by the speed and efficiency of the conversion process", said McCarthy.

"I expect the store conversion programme to be substantially complete by the end of April, and still expect to generate incremental EBITDA of at least £25m from the transaction", he added.

Poundland's plans to use the larger-format Family Bargains locations - acquired as part of the 99p Store deal - were advancing, with a multi-price format set to debut in April.

The group also described its cash position as strong, with a net balance of £35.4m at the end of the quarter, up from £33.9m a year earlier.

In its interim results in November 2015, Poundland said its profits had dropped by 43.5% to £5.3m and like-for-like sales were down 2.8%.

That let to an almost immediate 20% drop in its stock to 222.5p - the lowest it had seen since floating at 300p.

However, those interim results did not include the 99p Stores acquisition, as that transaction was completed on 28 September 2015 - one day after the period ended.