Poundland had previously guided that it expected profit in its 2015-16 year to be phased towards the second half, when it will open less stores than the first half and when comparative sales numbers are also softer.
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“We’re confident of achieving at least £25 million of incremental EBITDA from the acquisition and we are now increasing our United Kingdom & Ireland store target from 1,070 to 1,400 stores”, McCarthy revealed.
The discount retail chain’s profits before tax fell a staggering 43.5% to £5.3m in the six month period ending on 27 September, while like-for-like sales were down 2.8%.
In September, Poundland’s £55m takeover of rival 99p Stores was given formal clearance from competition authorities. Poundland said it would “convert these assets to the Poundland format at a pace”.
“The acquisition structure gives us a robust balance sheet, enabling us to overcome the challenges of rapid conversion and restructuring of the acquired portfolio, whilst giving us the flexibility to exploit any further opportunities that may emerge such as investing in efficiencies to counter the impact of the National Living Wage as well as opportunities that may arise in Europe”, the firm added.
The company said it had identified £25m of potential benefits as a result of the deal – from factors including being able to buy in greater volume at lower cost and improvements to ranges within 99p Stores. Savings will also come from being part of a larger group.
Poundland opened 55 stores in the United Kingdom and Ireland in the first half, compared to 34 in the corresponding period past year.
Poundland chief executive Jim McCarthy said the merger would provide a huge lift for the retailer as the financial year progressed.
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Poundland is pressing ahead with the rebranding of 99p Stores, after a poor half-year result and a warning of “highly volatile” conditions in the third quarter.
