Poundland’s one to watch

<p>Speculation regarding Poundland finally looks set to come to pass, as the UK-based discount retailer confirms plans to float later this year on the LSE, […]</p>

Speculation regarding Poundland finally looks set to come to pass, as the UK-based discount retailer confirms plans to float later this year on the LSE, in addition to appointing new members to its board.  The move has long since been anticipated and will likely garner sufficient interest from investors.

Poundland has undoubtedly fared quite well over recent years.  The company took GBP880.5 million in revenue for its year ended March 2013 – that is around a 13% increase on the year before and a notable 167% surge since 2008.

Net income came in at GBP28.7 million, up more than 20% over the previous year.  And Poundland is not alone.

Close – albeit smaller – competitor, Poundworld Retail, although having seen a decline in earnings of late, also enjoys a healthy top-line growth – some 42% year-on-year increase in the same period (year ended March 2013).

Those are very impressive figures, particularly when compared to players in the broader sector (i.e. including non-discount retailers), some of which are just about scraping single-digit growth.

Indeed, the discount retail sector has certainly remained hot over the last few years, as economic concerns continue to place a hold on consumers’ purse strings.

Of course the question is: how long is Poundland’s good run going to last? 

Well, likely headwind from increased competition aside, as the economy gradually changes for the better it stands to reason that consumer spending habits will likely begin to change accordingly. At what point the change occurs is, of course, anyone’s guess.

Still, as current conditions persist and Poundland continues to capitalise on it effectively, the growth story sure does look intact.

So, for now, there’s plenty to like about the company – for consumers and would-be investors alike.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.