Poundland reports 26% dive in first-half profits: What the analysts say

“The retailer was quick to brush off the setbacks, striking an optimistic tone throughout its release and placing the blame squarely on short-term issues.

“Tough comparatives have certainly played their part – most notably the timing of Easter, which shifted some sales forward into the second half of Poundland’s previous financial year.

“Looking further ahead, it might be premature to suggest that the value market is reaching maturity, but perhaps we are seeing the early signs of an easing of growth in the sector. This is clearly not a view shared by Poundland’s board though, which continues to bet on the rapacious appetite for bargains among British consumers, upping its store target to 1,400 stores in the UK and Ireland and accelerating the rate of expansion in Ireland.” – David Alexander, consultant at Conlumino

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“The interims have something for everyone: the bears will focus on the weak current trading but as bulls we are extremely encouraged by the rhetoric on the 99p Stores deal.

“Overall, Poundland sees this as a £25m+ EBITDA source, with the stores all being converted by April. Most important of all, the 27 Family Bargains stores will be used to trial a “new multi-price format”. This is exactly what the company should be doing and we are highly encouraged.” – Jonathan Pritchard, John Stevenson at Peel Hunt

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“While the interim results were directionally disappointing, the strong build of new stores into peak trading and against weaker comparatives should drive a much improved second-half performance, although comments on recent volatility and ongoing euro weakness are unhelpful features.

“The bigger medium-term prize will be the successful integration of the 99p Stores into the Poundland trading format with its superior operating metrics and financial returns.” – David Jeary, retail analyst at Canaccord

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“The disappointment lies within current trading which is clearly weaker than expected as Poundland heads into peak. The 99p Stores acquisition should yield material synergies, but less than we expected and the condition of the business is worse.

“The shares do not appear to be expensive, especially when building synergies into account. However question marks over the sustainability of a fixed price model and the underlying Poundland estate are likely to remain.” – Kate Calvert, head of retail at Investec