Poundland reveals IPO plans

Poundland today outlined plans for a £700 million-plus flotation, joining the rush of retailers seeking a place on the stock market as the outlook for high street spending improves.

The chain, which has more than 500 outlets across the UK and Ireland, has seen sales surge as austerity-squeezed consumers hunt for a bargain. It has also attracted well-heeled shoppers increasingly on the look-out for savings.

Shares will be offered to institutional investors in next month’s initial public offering, though the pricing has yet to be set. Late last year, it was suggested that Poundland would seek a valuation of between £700m and £800m.

Chaired by former Tesco executive Andrew Higginson, the group has also appointed a raft of new directors as it prepares for the float, including former Carpetright chief executive Darren Shapland.

Chief executive Jim McCarthy said: “The value retail sector has been through a period of profound change in scale, customer perception and financial performance. The sector is now a mainstream feature of the UK retail market and Poundland has been a central architect of that change.”

The firm, which opened its first store in Burton-on-Trent in 1990, says that some 22 per cent of shoppers now come from the wealthiest section of the population.

It is targeting a doubling of its British store estate to more than 1,000 as well as further international expansion after a profitable first full year of trading at its Dealz business in Ireland, with Spain next on the list.

The flotation of Poundland is one of several expected in the retail sector in 2014. Newsagent and convenience store operator McColl’s and online domestic appliances specialist AO announced intentions to list in recent weeks. Boohoo.com, Fat Face, House of Fraser and Pets at Home are also expected to come to market later this year amid an improving backdrop for consumer spending.

Figures released by the Scottish Retail Consortium suggest that stores enjoyed a rebound in trading last month after disappointing sales in December.

Clothes, furniture and electrical goods all sold well as total sales jumped 4.3 per cent, compared with a year earlier. Like-for-like sales, which exclude the impact of new selling space, were up 2.5 per cent.

Poundland, which does not need to rely on an online store for its sales of everyday items, all priced at £1, posted revenues of £880.5m in the last financial year to the end of March, with underlying profits of £45.5m.

Sales for the nine months to the end of December topped £758.3m, and underlying earnings came in at £45.2m.

Founder Steve Smith netted £50m from selling his stake in the business more than a decade ago. US private equity outfit Warburg Pincus bought the group for £200m and now looks set to net a massive windfall as it floats for up to four times that value.

Directors of the company will be able to cash in part of their stock under the terms of the flotation.

Last month, Poundland revealed that it served more than seven million shoppers in the peak Christmas trading week and said it saw a record performance in the five weeks to 5 January.

Source : Scott Reid - The Scotsman
www.scotsman.com/business/retail/poundland-plans-to-join-stock-market-next-month-1-3310070