Poundland on track for full year despite tough second half

Poundland said it was on track to meet full year profit expectations despite a difficult second half.

In a trading update, the discount retailer said like-for-like sales fell 4.9% in the second half of the year.

Total sales in the fourth quarter were up 29.8%, thanks in part to the addition of the portfolio of 99p stores, which it bought last year.

The company said it has been a tough quarter for the core business, which was impacted by difficult market conditions and disruption from the accelerated pace of delivery of the 99p Stores' conversion programme.

Still, Poundland expects underlying pre-tax profit before 99p trading losses to be more or less in line with current market expectations of £35.8m to £41.5m, with consensus at £38.7m, thanks to a focus on managing its margin and costs well.

Poundland said it was on track to deliver targeted incremental annual earnings before interest, tax, depreciation and amortisation of at least £25m, with around two-thirds expected to be generated in the year to March 2017.

Chief executive Jim McCarthy said: “Against a tough retail background, this has been a transformative year for Poundland, strengthening further our position as Europe's biggest single-price discounter. We have added over 300 shops to our portfolio in the UK & Ireland, in particular in the South of England, substantially increasing our geographical reach and scale.

“The 99p Stores' conversion programme will complete by the end of April, at which point we expect to see the significant benefits of over 900 stores trading as one cohesive retail operation begin to materialise."

Poundland ended the year with 906 stores compared with 593 in 2015, including 843 in the UK, 53 I Ireland and 10 in Spain.

At 0920 BST, Poundland shares were up 0.7% to 148.50p.