Poundland rocked by costs

POUNDLAND blamed store-opening costs among a raft of other excuses for a profit warning that wiped 13pc off the value of the stock, taking shares below their 300p float price for the first time.

The budget retailer slipped 41.6p to 268p after it said the cost of opening 55 shops over the first half, compared with the 34 opened in the first six months of last year, would hurt.

It also blamed the impact of converting foreign currencies into pounds, and disappointing recent trading, in a dismal update ahead of its interim results next week.

The firm, which was riding high on a change in shopping behaviour in favour of discounters, said underlying sales for the 25-week period were down 2.9pc.

This compared with growth of 4.7pc during the same period a year earlier. Pre-tax profit for the first half is now expected to be lower than that seen over the first six months of last year.

It made the announcement as it launched an expected £50m share placement to fund its purchase of smaller rival 99p Stores.

The £55m deal is expected to complete at the end of this month, having been cleared by competition regulators last week in a process that has dragged on since February.

But in another blow to Poundland, it warned that the 251 99p Stores were in worse financial health than thought.

It said it had had limited access to detailed trading performance, adding ‘indications are that 99p Stores’ financial position has weakened’ but that this does not affect the strategic rationale for the acquisition.