Poundland and Dealz: H1 and YTD like-for-like growth

Lucy Ingram
Retail Analyst
@RetailAnalysis

Date : 23 June 2020

Poundland's parent group Pepco has released its H1 results, for the six months ending 31st March 2020. Also, its year-to-date results for the five months prior to the end of February 2020. The results reveal a positive performance for Poundland and Dealz with like-for-like growth in both periods.

Like-for-like growth for Poundland and Dealz but fall in profits

Overall the Pepco group's revenue grew 9.7% for H1 2020 and 14.4% year-to-date.

Poundland and Dealz H1 to 31st March 2020 Pre-COVID-19 YTD October to end of February 2020
Revenue €983m (£888m) €845m (£763m)
Total revenue growth 4.8% 4.3%
Like-for-like revenue growth 2.7% 2.2%
Number of stores 914 915
Store growth 4.5% 4.6%

The Pepco Group reported a 16.3% fall in first-half profits to €89m (£80m).

COVID-19 impact

130 Poundland stores were closed in response to the reduced trading environment during the outbreak of the pandemic. Poundland is now in the process of re-opening all stores. Throughout the period of closures the retailer benefitted from customers stockpiling essentials. However, stores that did remain open did so with significantly reduced customers at c.60% for a period of four weeks.

CEO of the Pepco Group Andy Bond said;

"Looking forward, the consumer outlook remains uncertain and our plans reflect our expectation of a ‘new normal’ trading environment once we all emerge from the COVID-19 virus. However, it is likely that consumer demand for discount retailing will increase in a period of prolonged economic uncertainty and we are extremely well placed to take advantage of this trend. We remain confident that we have the vision, the strategy and the business model to continue to deliver attractive long-term sales and profit growth."

Poundland's evolution drives positive results

Poundland's positive results have been driven by increased average transaction value thanks to its new pricing structure that was rolled out to all stores in October 2019. The retailer has moved from single price to simple price and introduced five new price points to the range; 50p, 75p, £1.50, £3 and £4. These sit alongside the standard £1 price point and the £2 and £5 price points that were introduced in 2017. Around three-quarters of products remain at £1. The retailer can now carry market-leading products which would not previously fit into the price point range. Its new pricing structure allows the retailer to flex the range and encourages shoppers to buy bigger baskets, without losing its value positioning.

The retailer has also introduced a chilled and frozen range to 20 stores with a further 10 having chilled only. Before the pandemic began Poundland had announced a further 60 stores would receive the new range and then had to pause plans. The rollout has now re-commenced. Whilst these changes may not make it possible for shoppers to complete a total shop, it helps grow basket size with products shoppers buy most often. Poundland's continued evolution is in line with leading variety discounters Home Bargains and B&M enhancing their grocery offers.

What does the future hold?

The focus at Poundland will be to continue to reduce operating costs. 76 leases were renegotiated in H1, with rent reductions ahead of Poundland's 25% expectation. It will also continue with its goal to serve more missions with the continued rollout of its frozen and chilled range.

Expansion is set to continue at Dealz. There are currently 65 Dealz stores in Ireland, with plans to continue to open around 10 stores a year, for the foreseeable future. Dealz is also expecting to expand its grocery offer in the future by adding the chilled and frozen range to stores. 

Looking for more insight on Poundland?

Subscribers can read more about the evolution of Poundland in our report showing the changes the retailer made to its proposition in 2019 in more detail.

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