Poundstretcher profits still rising as it comes through CVA
Sales at the Poundstretcher store chain have stayed strong over the past half year, despite a CVA and new cost pressures, according to its chief executive.
CEO Aziz Tayub said the business was planning to soak up some of the potential cost rises from brands including Kelloggs, Heinz and Fox’s biscuits as it heads into the busy Christmas season. But some of its prices would have to go up, he said. He said the group saw sales of £140 million in the six months to the end of September, and pre-tax profits for the half year of £23 million.
In 2020 the discount chain went into a CVA – a legally binding agreement with its creditors – to try and bring down cripplingly high rents, before going on to close loss-making stores with the loss of around 200-250 shop staff.
Mr Tayub said the company’s turnaround saw pre-tax losses of £49.5 million in the year to March 31, 2020, turn into pre-tax profits of £30 million the following year.
He said management were conservatively estimating pre-tax profits for the full current financial year of £40 million, on the back of cheaper rents, margin improvements and a fully stocked warehouse at their base between the villages of Desford and Kirby Muxloe in Leicestershire.
Around two-thirds of Poundstretcher stock comes from China with the rest from the UK and Europe. Many retailers are reporting supply chain pressures right now. Tayub reported: “We have no shortage of stock – we have plenty of imported stock and plenty of UK stock, which is enough to fulfil our sales targets right up to next March. It’s possible that the supermarkets are suffering as they sell products faster, but if you go into our stores they are full of food, toiletries and Christmas stock. We do not see our prices going up as much as others partly because we are very careful about what we buy”.
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