Poundland s one to watch

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.

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