Poundland’s pandemic performance limited by high street aversion, says GlobalData

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Following today’s release of the Poundland figures for H1 FY2020/21; Jonathan Rock, retail analyst at GlobalData, a leading data and analytics company, offers his view: “Despite its status as an essential retailer which allowed it to keep stores open during lockdown, Poundland Group’s (including Dealz) revenue fell 0.5% in the six months to the end of March 2021, due to its reliance on struggling high street locations and lack of an online presence. However, underlying EBITDA rose 12.5% to €108m due to elevated demand for high-margin general merchandise categories.

“Despite the shift away from high street shopping, Poundland seems to be doubling down on these locations and capitalising on the potential for rent reductions, intending to renegotiate 211 store leases in the next two years. Though this strategy will help Poundland boost profitability, it leaves it vulnerable to the potentially long-term shift away from the high street towards retail parks and online.

“Progress with Poundland’s online platform continues – it has recently expanded its online delivery service across the midlands. While Poundland has been slow to invest in online, this new development will give it an advantage over out-performing rival B&M, which does not currently operate a transactional website.

“The Pepco group remains bullish over Poundland’s long-term prospects; its value proposition will continue to appeal to shoppers looking to trade down, and its expanded product range (including a wider coverage of chilled & frozen foods) will help drive footfall to stores.”