Poundland sale must act as wake-up call for chancellor

Poundland is on the City’s discount sale rail.

- JAMES MOORE

Despite posting a 1.6bn turnover last year, its European owner wants out. Investors in B&M, a similarly value-focused retailer, have also been heading for the exit.

Despite an apparently robust trading update in January, B&M looked at the future, and especially its profit guidance, and they ran. Smart move. Last week, the group issued a profit warning and said its CEO Alex Russo was stepping down.

The shares have been in long-term decline. Over the last 12 months, they’re underwater by nearly 52 per cent. By contrast, the broad-based FTSE All Share index is up by 11.5 per cent over the same period.

What’s going on? Poundland is a victim of its European parent, Pepco, seeking to pep up its performance by streamlining the group and operating under a single brand. This leaves Poundland as an unwanted child with very poor prospects.

Pepco boss Stephan Borchert said: “At Poundland, recent performance has been very challenging, impacted by declines in clothing and general merchandise following the transition to Pepco-sourced product ranges at the start of the year.” A sale, he said, was the preferred way forward for the retailer. Does this mean a buyer coming along and buying it for a pound? Perhaps that’s pushing it a bit.