Mixed bag of results from Poundland

While the Willenhall-based budget chain is still expanding overseas it has shut a raft of unprofitable UK stores it inherited in its takeover of the 99p Stores chain three years ago.

Now owned by Pepkor Europe, part of the South African Steinhoff group, Poundland saw its overall sales drop by five per cent to £1.19 billion in the nine months to the end of June, but on a like-for-like basis that strips out the impact of the 60 stores that closed early last year, sales were actually up by 1.7 per cent, outperforming the wider high street.

Poundland insisted it is "profitable and stable" despite an ongoing crisis at its owner, Steinhoff.

More stores have been opened in Poland, France and Spain, and the chain now has around 850 branches employing around 18,000 people, with hundreds working at its headquarters in Willenhall and its major warehouse at Bilston.

Boss Andy Bond said the chain had benefited from the rollout of Pep&Co fashion outlets within its existing stores as the retailer ramps up competition with Primark.

He added: "Poundland continues to make good strategic and operational progress to widen its appeal.

"It's extending the value it can offer through additional price points and the introduction of Pep&Co fashion 'shop-in-shops' is giving customers a distinctive reason to shop on the high street.

"Underpinned by the introduction of tighter retailing disciplines, Poundland is changing at a pace led by its customers who are really embracing the difference."

The performance of Poundland stores with a Pep&Co has been strong, the firm said, with like-for-like sales at those outlets jumping 7.7% in the period.

But the results come at a sensitive time for Poundland's South African owner, Steinhoff, which was plunged into crisis last year after disclosures of irregularities linked to its 2016 accounts.

Multibillion-euro holes were unearthed which saw 90% of Steinhoff's stock market value wiped out and triggered a fire sale of assets, leading to speculation that Poundland could also be sold.

Steinhoff's board is currently mulling more asset sales as it looks to boost its cash flow and pay down debt after striking a standstill deal with its creditors.

Mr Bond sought to distance the firm from the troubles at Steinhoff, saying: "I'm very pleased with the progress that the business is making across the board, undistracted by events at our parent company.

"Both retail businesses are cash-generative, profitable and stable, with management teams encouraged by the strong operational progress we're now making."

Poundland's European parent, Pepkor Europe, moved to calm suppliers in January by replacing planned investment from troubled Steinhoff with a £180 million independent loan facility.