Poundland’s owner has said the retailer has lagged behind expectations after a major overhaul of its product range, higher labour costs and the introduction of former Wilko stores onto its estate.
Pepco Group, which owns Poundland in the UK, said sales at the budget retailer grew 5.3% to 1.05 billion euros in the six months to March 31, behind the wider group’s sales growth of 16.3%.
The Polish parent company said this was partly down to replacing the clothing on sale in Poundland with a new, Pepco-sourced range.
While it said customers had been positive on the new range’s value for money, it said sales had struggled with the offer “not fully replicating the previous depth of Poundland’s men’s and women’s ranges and coverage across sizes”.
That has led to lower revenues across Poundland’s clothing category since the introduction, which in turn hit overall turnover. Poundland’s like-for-like revenue fell 0.7% in the first half.
It said: “These transition issues will continue during full-year 2024 – and while we expect an improved trajectory in Poundland’s clothing performance during the second half of the year, we are only expecting to see the full benefit of the changes from full-year 2025 onwards.”
Meanwhile operating costs grew 9.9% after the increase in the national living wage and an increase in store numbers.
The UK’s national living wage increased by 9.8% in April to £11.44 an hour, and applies to workers aged 21 and over.
Poundland grew its store footprint by 41, with 861 stores at the end of the first half. It opened 81 stores and closed 40.
Of the 81 newly opened stores, 46 were converted Wilko outlets, after Pepco took on the leases of 71 Wilko shops following its administration in August 2023.
Andy Bond, executive chair of Pepco Group, said: “Despite a positive [fast-moving consumer goods] contribution, Poundland’s performance was behind expectations due to challenges in implementing the significant range change to Pepco products, which we are addressing.”