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Poundland quids in to take discount offering online

Poundland, the high street retail chain where customers can buy everything from two litres of milk to Daniel Craig's unauthorised biography for a quid, is looking to sell its products online. Its chief executive, Jim McCarthy, said the private equity-owned chain is drawing up plans to sell homeware, fancy dress and party items over the internet within two years. However, not all of Poundland's products would go online as the cost of postage would be too great. He said: "We are investigating what we can sell at the moment."

Mr McCarthy also confirmed plans to expand overseas once the chain has reached its target of 800 stores in the UK. Poundland set out aggressive growth plans after Warburg Pincus splashed out £200m for the West Midlands-based group in May. Poundland, with its bargain products, has fared well in the recession.

In the summer, the retailer reported an operating profit of £21.5m for the 12 months to March, up 81.5 per cent on the previous year. Sales increased 29 per cent to £509.8m. Poundland now has three million customers a week. It will have 320 stores open by Christmas, with a further 50 a year planned from 2011.

Much of this expansion will be driven by opening stores in towns where Poundland does not currently operate, but McCarthy insisted that there were plenty which could sustain two or three stores. Poundland, which has been trading since 1990, has tapped into the poorer end of the social spectrum. But in recent years it has seen its customer base grow to include households from the wealthier A and B socioeconomic demographic.

Mr McCarthy said: "We have two types of customer. Those that need to shop here, who need to save, and those who choose to shop with us because they choose to save money. More A-B customers are giving us a try and liking what they see. A lot of our customers know austerity. They make a virtue of spending wisely."

Poundland was founded by two former market traders from Wolverhampton. One of those, Dave Dodd, led a management buyout of Poundland, backed by the private equity group Advent, in 2002.

Mr McCarthy succeeded Mr Dodd as chief executive in 2006. He was previously a managing director at Sainsbury's. Mr Dodd has now set up a rival value retail chain called Hub which unveiled itsfirst set of stores this autumn. Mr Dodd has ambitious plans to create a 200-strong chain.

Source : Laura Chesters - The Independent

21 November 2010
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