Poundland planning for pricier goods

The Willenhall based chain was bought by South African retail group Steinhoff for £610 million last summer.

Since then the new owners have rung the changes, introducing 50 of its Pep&Co budget fashion outlets in Poundland stores.

Now they are planning on expanding from Poundland's traditional £1 for everything offer to selling more expensive goods; what it calls "a multi-price point product range". It also aims to expand Poundland's product ranges to include clothing.

Steinhoff, which also owns Bensons for Beds in the UK, is also looking at ways for Poundland to collaborate with other companies in the group on a supply chain initiative, probably aimed at cutting the cost of buying goods from suppliers.

Unveiling the group's half year figures, Steinhoff chief executive Markus Jooste said: "We remain excited about the Poundland acquisition providing the general merchandise business with the necessary scale in the UK.

"Poundland is trading ahead of expectations with continuing positive like-for-like revenue growth for the six months under review."

Poundland added £790m in revenue to Steinhoff in the months since it became part of the group, which said the chain "continued to perform ahead of expectations".

After a slump in sales over the last year or two, Steinhoff said it had seen like-for-like sales up in both the first three months of the year and in the second – the first positive growth since December 2014.

Since the takeover Poundland has closed 57 loss-making stores, part of the delayed and difficult 99p Stores takeover that had hit profits before Steinhoff moved in with its takeover deal. It still has around 830 in the UK, Ireland and in Spain, where it trades as Dealz.

Steinhoff says the sale of the loss-making stores should improve Poundland's profitability. The group has also converted its GHM! budget chain into Poundland shops over the last few months.

With the Poundland deal and a string of other takeovers over the last year, Steinhoff now has 6,700 stores around the world. In the six months to the end of March its operating profits rose 13 per cen to €903 million (£784.23 million) while revenue growth of 48 per cent to €10.1 billion (£8.77 billion).

But Steinhoff’s operating profit in the UK dropped 12 per cent during the period to €23 million (£19.96 million) and revenue dropped 19 per cent to €325 million (£282.13 million), which has been blamed on the drop in the value of sterling since last year's Brexit vote.