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19 November 2015
Poundland (PLND) shares have landed themselves a pounding today after first-half profits fell by almost 50%, troubled by higher costs for its trial run in Spain and the £55m acquisition of rival 99p Stores. What’s more the CEO’s outlook message wasn’t exactly upbeat, divulging that current trading had been ‘highly volatile’ and that we has nervous about ‘non-traditional consumer behaviour’. This suggests the key run-up to Christmas (especially next week’s US-imported ‘Black Friday’) could be make or break for the discount retailer in terms of rescuing full-year results. After competitor B&M disappointed on Tuesday with worryingly rapid expansion and distribution hiccups, this adds worry to the discount sector. While PLND shares are off fresh all-time lows registered today, they are nonetheless a whopping 40% from their strong IPO debut and loyal investors will be banking on a rush of cost-conscious Christmas shoppers spending pennies to help Poundland’s FY results take care of themselves.
Mike van Dulken, Head of Research
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