16th Jun 2016 06:34
LONDON (Alliance News) - Poundland Group PLC on Thursday reported a huge drop in profit in its recently ended financial year due to costs associated with its acquisition of 99p Stores, and it also cut its dividend, but total sales were boosted by the acquisition.
On Wednesday, Steinhoff International Holdings NV announced it is considering making an offer to buy Poundland. Poundland responded shortly after noting Steinhoff's announcement and "strongly" advising shareholders to take no action. It made no further comment with its results announcement on Thursday.
The FTSE 250 discount store chain said pretax profit in the year ended March 27 dropped to GBP5.9 million from GBP36.2 million the year before, despite total sales rising to GBP1.33 billion from GBP1.12 billion.
Total sales benefited from the acquisition of 99p Stores last year, but the costs associated with converting those stores into Poundland stores hit profit. Like-for-like sales, which excludes 99p Stores, decreased by 3.9%, which Poundland blamed on a difficult market, falling high street footfall, a tough first-half comparable, and changing shopping behaviour.
Poundland will pay a total dividend of 3.65 pence, lower than the 4.50p paid the year before, which Poundland said represents maintained cover of 3 times based on underlying earnings per share before converted 99p Stores.
Poundland added that total sales in the 11 weeks ended June 12 were up by more than a quarter year-on-year to GBP300.9 million from GBP231.6 million.
"The retail environment remains challenging, but with our significantly enlarged store portfolio, greater scale and ability to focus fully on trading our stores, I believe we are well placed to make progress in the year ahead," Poundland Chief Executive Jim McCarthy said in a statement.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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