Poundland sets target of 1,000 stores as IPO mooted

The group is also targeting a doubling of its British stores to more than 1,000 as well as expansion in Europe, giving it a growth story to sell should it choose to press the button on a London listing on the back of a successful Christmas.

Discount retailers have outperformed the market in the economic downturn as consumers, battling inflation rising faster than wages, have sought to make savings. On Monday, Aldi posted a more than doubling in 2012 profit.

Poundland, which has stores across Yorkshire, is 76 per cent owned by private equity group Warburg Pincus, with the balance owned by the retailer’s management, led by chief executive Jim McCarthy.

Speaking after the 458-store firm posted a 15.6 per cent rise in underlying earnings for 2012-13, Mr McCarthy said he understood the strong performance “would prompt some of the questions” (about an IPO) but declined to be drawn on the issue.

A Financial Times report in May said an auction among private equity firms was more likely than a flotation. Mr McCarthy said of Warburg Pincus: “They’re private equity and they buy and sell businesses. Management’s job is to keep driving the numbers and we’ll continue to focus on that.”

Warburg Pincus declined to comment. Stronger equity markets have helped revive new listings in Europe this year. European firms have raised $15.9bn from flotations in the first nine months, three times the year-ago level, according to ThomsonReuters data.

The Poundland group made underlying earnings before interest, tax, depreciation and amortisation (Ebitda) of £45.4m in the year to March 31, up from £39.3m.

Total sales rose 15 per cent to £880m as its offer of over 3,000 products and over 1,000 branded goods from firms such as Cadbury, Heinz, Coca Cola and Kodak – all at the price of £1– found favour with consumers. “We’re very good in austere times but we’re even better in good times,” said Mr McCarthy, noting the appeal of the Poundland brand is broadening across all socio-economic groups.

It opened a net 69 new stores in Britain and Ireland in 2012-13 and plans 50 net new stores in 2013-14, having already opened 30. “Over time I’m confident we will have over 1,000 Poundland stores in the UK,” said Mr McCarthy.