Discount store chain Poundworld reported a record year and said profits more than doubled as more customers ditch supermarkets in favour of pound stores.
After years of austerity, pound shops have lost their downmarket image and are now seen as good value for money for savvy shoppers who don’t want to be ripped off.
Discount general stores such as Poundland and Poundworld and discount supermarkets Aldi and Lidl have thrived during the downturn, while Britain’s big four supermarkets - Tesco, Asda, Sainsbury’s and Morrisons - are struggling.
Normanton-based Poundworld has succeeded by drawing in shoppers with cut-price promotions on high end products such as merchandise linked to blockbuster Disney film “Frozen”.
Pound shops were previously seen as selling poor quality products that were far inferior to branded rivals, but Poundworld has made a name for itself by selling big names such as Coca-Cola, Cadbury, Kellogg’s, Walkers, Heinz and Colgate at bargain basement prices.
Poundworld announced said operating profits rose 130 per cent to £14.6m following a record year of trading for the year to March 31.
Like-for-like sales rose an enviable 5.6 per cent at a time when the leading supermarkets are seeing negative comparative sales.
Turnover rose 22 per cent to £422.3m, thanks to a combination of positive like-for-like performance, 38 new store openings and the full year contribution from stores opened over the last year.
The company ended its financial year with 280 stores nationwide.
In May, the firm sold a majority stake in the business to US private equity company, TPG Capital, which has injected new funding to accelerate the store expansion programme to over 60 stores a year from 2016 onwards.
The sale turned Poundworld’s founder Chris Edwards and his son, Chris Edwards Junior, into multi-millionaires.
Mr Edwards said that following a successful trial during the first quarter, the conversion of the multi-price Discount UK stores to the new Bargain Buys fascia was completed.
Bargain Buys saw stellar like-for-like sales growth of eight per cent over the year.
Poundworld’s underlying earnings rose 75 per cent to £20.8m and net debt was reduced by 31 per cent to £10.6m.
“We have seen a record financial year and one of landmark progress for the company,” said Mr Edwards.
“We expect the year ahead to be one of development and consolidation that includes investment into a new 500,000 square foot warehousing facility adjacent to our current head office and the replacement of our existing ERP system.”
Construction started at the end of last month and the site is on target to complete in autumn 2016.
The new distribution centre will create 300 jobs.
“We’re confident that these changes will provide a strong platform for rapid growth over the next three years bringing our proposition of convenience and value to even more customers across the UK,” said Mr Edwards.
Established in 1974 on a Wakefield market stall, Poundworld is the UK’s second biggest single-price discount retailer in the UK (behind Poundland) and serves over two million customers a week.
The company has 295 stores through two fascias, Poundworld and the multi-price brand Bargain Buys which now trades from over 50 locations UK wide.