Poundland Group PLC Offers Investors A Route Into The Discounters’ Growth Story

Poundland Group PLC (LON:PLND) reports strong first-half results.

Sam Robson

I've been a Fool for over a decade, and am proud to currently call myself the Editor in Chief of TMF UK. I follow Foolish investing principles, and buy shares in quality companies throughout both bull and bear markets!

Published 27 November, 2014 10:51 am GMT

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Shares in Poundland (LSE: PLND) lifted in early trade today, following “strong first-half results” reported in its interims.

Pre-tax profit jumped up by 11.7% to £9.3m for the 26 weeks to 28th September against the comparative period last year, while like-for-like sales improved 4.7% on a constant-currency basis. The period also saw 28 net new stores within the UK and Ireland, lifting the total number to 556 stores, keeping pace with plans to open 60 across FY15.

Internationally, Poundland’s Dealz franchise has moved into the Spanish market with three stores currently operating, including one in Madrid. Further expansion to increase store count to 10 by the end of FY16 remains on track. Chief executive Jim McCarthy said the multi-price Dealz stores are trading well, going on to say:

“As the structural changes in UK retail continue to redraw the landscape, we are building our reputation for offering amazing value every day to our customers and substantially broadening our appeal… While our full year outcome, as always, is dependent on delivering a good Christmas for our customers, I remain confident of further progress throughout the year.”

Poundland’s interim dividend of 1.5p represents a forecast yield of just 1.3%, so income investors may prefer the FTSE 100 average-beating yields on offer at supermarket rivals Tesco (7.9%), Sainsbury’s (7.2%) or Morrisons (7.2%). However, rumours continue to circulate that they might be forced to cut dividends due to the price war in the battle to win consumers’ favour.

It’s one of the most interesting investing stories in recent years, with Aldi and Lidl’s spectacular rise causing wholesale changes in the sector. And with those two discounters being privately owned, publicly listed Poundland may well offer investors a route into a successful growth story should this trend continue.