Poundland has been urged to rethink its range strategy to get sales back on track, after another bleak trading update.
The update from owner Pepco on Thursday did not include figures for Poundland but said its trading largely followed the trend of previous updates, in which it posted a drop in like-for-like sales.
The variety discounter saw year-on-year like-for-like sales fall by 0.7% in its first half to 31 March and by 6.9% in its third quarter to 30 June. In both cases, the company blamed the challenges of implementing a new group-level sourcing arrangement through parent Pepco for clothing and general merchandise, a transition that began in September 2023.
The new trading update from Pepco said performance was still “affected by the transition to Pepco-sourced clothing and general merchandise, which is being addressed and initial benefits are expected to come in full year 2025”.
GlobalData retail analyst Sophie Mitchell said: “Pepco must rethink its range strategy in its Poundland stores as it addresses a very different market to that of its Central European arm.
“Poundland must reconsider the mix of products it has in its stores, avoiding allocating too much space to clothing until awareness of its ranges has improved. Ensuring its clothing range is displayed attractively at the front of stores could aid awareness initially.”
Poundland stores selling clothing expanded the range and doubled the floor space devoted to baby and kids wear as the retailer completed the switch to the new sourcing arrangement for the category last year.
Mitchell also urged Poundand to not delay in rolling out its new loyalty app, Poundland Perks, across the UK, having piloted it in the Isle of Wight since last year and in Scotland since June.
“The Pepco clothing range in the UK will be competing with grocers, who often attract grocery shoppers to their clothing ranges through loyalty scheme offers or ad hoc discounts,” said Mitchell.
“Poundland must therefore make its clothing range competitive with this, utilising the loyalty scheme it is rolling out to the rest of the UK by the end of 2024.”
Pepco’s trading update said the group was set to report record revenues of more than €6bn for 2024 as it expanded its store base.
However, like-for-like sales in the 51 weeks to 22 September declined 3.1% as the group continued to be hit by supply chain issues affecting the availability of stock.
In August it emerged Poundland had cut about 60 jobs in its Walsall head office across its supply chain, finance, IT and property teams.
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