Poundland have enjoyed strong sales growth and have maintained steady profit growth against increasing inflation. This, among other factors, has been aided by a strong customer base of predominantly female shoppers every week in the C1, C2, D and E categories (the working classes in a system of demographic classification used in the United Kingdom). The chain employs 7,000 staff and their company union is the Union of Shop, Distributive and Allied Workers (USDAW). Their closest rival in the market is 99p Stores, who undercut Poundland's prices by a penny.
Claiming to have introduced the concept of single-price retailing, Dave Dodd and Stephen Smith founded the retail chain in April 1990 with a starting capital of just £50,000.
The first pilot store opened in December 1990 in the Octagon Centre, Burton upon Trent, after countless turndowns by big landlords who had reservations about allowing such a store to operate, given they could easily undercut every retailer in sight. It was soon followed by other stores, most notably on The High Street, Meadowhall. Growth continued throughout the early 1990s, with six stores by December 1991 and a further seven a year later. In 1995, Smith failed to plan for more warehouse space, and retail growth pushed their storage capacity past its limits. In the same year, stock theft reached an unacceptable high. In response, a new 130,000-square-foot (12,000 m2) warehouse was built, although at a cost of heavy profit losses, from £850,000 in 1994, to £400,000 in 1995. The retailer managed to resolve their operational difficulties throughout 1996 when their new warehouse site became fully operational.
Although enduring a troubled first few years, Poundland has since become a multi-million pound business, with its 150th store opening in Northampton in mid-2006 and a gross turnover of £311 million in 2007, up from £281m the previous year. Following a management buy-out in 2002, the company has continued to grow with annual profit growth of 23.44% (2007) and aims to continue its store expansion by 30 a year into 2009, overseen by James McCarthy. Chairman Colin Smith, speaking in April 2005 as Poundland revealed it had invested £20–25 million in building a 300,000 square feet (28,000 m2) distribution centre, said there was great scope for further growth, saying "We can clearly conceive this chain having 400-plus stores in future".
Poundland operate a recycling initiative through which they will give money for old mobile phones, while at the same time making charitable contributions and helping the environment.
Poundland, unlike many of its rivals, have been one of the few to report strong sales in a time of economic crisis, with 2008-2009 revenue just short of £400m, up from £330m for 2007-2008. Despite this, Poundland has not been totally immune to the recession. The retailer has been forced to close down stores that are not financially viable, even if well-positioned. Such was the case with their store in West Ealing, where it is believed high rental costs were one of the reasons why the company pulled out of the area. Although the chain has seen their strongest growth and sales during the recession, CEO Jim McCarthy notes that there is a common misconception that Poundland is a better business in a recession, when actually they're better during normal economic conditions, but are very robust to manage well despite the state of the economy.
When the rate of VAT was reduced in November 2008 to 15%, Poundland's prices remained fixed at £1, by reason that they have kept the same single price point of £1 for 18 years and during that time have always absorbed duty and increased supplier costs without raising its price point. Chief executive Jim McCarthy said the chain will pass the savings on to customers in other ways. With difficult economic conditions continuing into 2009, the supermarket retailer Asda announced in January 2009 that they would cut the price of many of their branded products such as Colgate toothpaste to just £1, in competition with Poundland who are offering the same branded products at the £1 price point. In response, Poundland introduced multi-buy offers to provide a larger quantity of the products for the same price of £1. The announcement comes after reports show that value retailers are seeing their sales and profits boom during the credit crunch, with value-conscious customers making the switch from traditional larger supermarket retailers for their everyday necessities. The retailer had a good start into 2010 when they announced they had seen a surge in sales by nearly 35% over the 2009-2010 festive period. Reports emerged in September 2008 that Poundland's owners, Advent International, were to put the retail chain up for sale, with figures showing that value retailers are seeing business boom in the current economic climate. These plans were confirmed in March 2010, when it was reported that Barclays Private Equity has expressed an interest in a potential take-over of Poundland for about £200m, although given that Poundland is on track to increase its turnover and profit in the 2009-2010 financial year, a higher price tag is possible. Advent originally bought Poundland in 2002 for £50 million and are reported to have hired Close Brothers to advise on its strategic options.
Claiming to have introduced the concept of single-price retailing, Dave Dodd and Stephen Smith founded the retail chain in April 1990 with a starting capital of just £50,000.
The first pilot store opened in December 1990 in the Octagon Centre, Burton upon Trent, after countless turndowns by big landlords who had reservations about allowing such a store to operate, given they could easily undercut every retailer in sight. It was soon followed by other stores, most notably on The High Street, Meadowhall. Growth continued throughout the early 1990s, with six stores by December 1991 and a further seven a year later. In 1995, Smith failed to plan for more warehouse space, and retail growth pushed their storage capacity past its limits. In the same year, stock theft reached an unacceptable high. In response, a new 130,000-square-foot (12,000 m2) warehouse was built, although at a cost of heavy profit losses, from £850,000 in 1994, to £400,000 in 1995. The retailer managed to resolve their operational difficulties throughout 1996 when their new warehouse site became fully operational.
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Poundland, unlike many of its rivals, have been one of the few to report strong sales in a time of economic crisis, with 2008-2009 revenue just short of £400m, up from £330m for 2007-2008. Despite this, Poundland has not been totally immune to the recession. The retailer has been forced to close down stores that are not financially viable, even if well-positioned. Such was the case with their store in West Ealing, where it is believed high rental costs were one of the reasons why the company pulled out of the area. Although the chain has seen their strongest growth and sales during the recession, CEO Jim McCarthy notes that there is a common misconception that Poundland is a better business in a recession, when actually they're better during normal economic conditions, but are very robust to manage well despite the state of the economy.
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