Investors flee Poundland after painful takeover
POUNDLAND found itself in the bargain bin again yesterday.
Investors continued to punish the discount retailer, which reported like-for-like sales were down 5pc in the six months to March 27 on Thursday.
Brokers yesterday cut their target prices for the shares to as little as 130p. Poundland was, until recently, the darling of the discount world.
But last year’s purchase of rival 99p Stores prompted an investigation by the Competition & Markets Authority, and much-needed investment in the acquired stores have hurt Poundland’s profits.
Analysts at Deutsche Bank are positive on the future of the business, however.
By the end of March, some 190 of the 220 99p Stores had been converted into the Poundland format. In most cases sales in a converted shop have risen 20pc.
A note by Deutsche predicted better things round the corner as the chain tries to introduce products which cost more than £1 – though you could argue that goes against the idea of the business.
Other experts think that the sharp change at Poundland could be a sign that Brits are bored with bargains. Joe Rundle, head of trading at ETX Capital, said: ‘As consumers have a few more pennies in their pocket than they did five years ago, the appeal of Poundland has diminished.’
Shares started the week at 153p. Yesterday they reduced a further 2.3pc or 3.25p to 139p.
Peel Hunt, meanwhile, prefers value chain store B&M.
The group has more than 500 stores and many of them are located in thriving retail parks, rather than on the High Street, which has notoriously struggled to attract shoppers over the past few years.
Peel Hunt says: ‘B&M is winning market share and opening new stores which are showing exceptional sales.’ Its shares nudged up 1.1pc or 3.1p to 275.4p. It seems a long time since the fizz of the AB InBev-SAB Miller deal.
But yesterday investors raised a glass when AB announced it had reached an agreement on how to protect the public interest once it acquired SAB.
The firm has promised funding to the tune of 1bn South African rand (£48m) to support small-holder farmers and promote local manufacturing.
Elsewhere, the company is reported to be acquiring a Virginiabased craft brewery called Devils Backbone Brewing for an undisclosed sum. SAB Miller’s shares frothed up 1.6pc or 67p to 4286p following the news, while Belgiumlisted AB Inbev climbed 1.8pc, or €1.9, to €112.
Once more, news out of China determined the fortunes of the
FTSE 100 for the day. China reported economic growth for the year of 6.7pc. It was worse than some expected, and better than some had feared, but it is the slowest rate the country’s economy has grown at for seven years.
The news pulled the FTSE 100 back by 21.35 points, or 0.34pc, to finish the day at 6343.75. France’s CAC fell 0.36pc, or 16 points, to 4,495 and Germany’s Dax dropped 0.42pc, or 42 points, to 10,051. The
Dow Jones was down too. The Aim market welcomed newcomer Osirium Technologies to its midst yesterday.
The cyber-security software provider joined the alternative market just after the bell rang on Friday. Shares floated at 159p and finished their first day of trading at 177p. International payment provider
FairFx reported gross profits were up 32pc year-on-year. The outlook had been torrid.
Terrorist events leading to lower tourism, and a weak British pound, don’t improve the outlook for transferring money overseas. But FairFx is aiming for 1m customers by 2017 – up from 508,048 now.
It attributes it’s the 103,338 new customers it added in 2015 to the launch of new apps, a revamped corporate customer proposition and its title sponsorship for Sky Sports F1 programming.
Investors transferring to the stock saw the share price shift up almost 3pc or 1p to 34.5p.