By Claire West

Pound land, the discount retailer has today reported a rise in annual profits, but says the first half of the current financial year will be "relatively subdued".

Their statutory pre-tax profits rose 68.3% to £36.2m in the year to 29 March, with sales up 11.9% to £1.12bn.

This is the first time that the budget retailer have broken the £1bn barrier.

Poundland's proposed purchase of rival chain 99p Stores is currently being investigated by competition authorities and the retailer said it expected a decision on the deal in October.

Paul Thomas of the retail consultancy Retail Remedy comments:
“Such blistering rates of growth are the sort of thing the mainstream supermarkets can only dream of.

“Poundland clearly didn’t get the memo about price deflation and squeezed margins.

“The chain’s beguilingly simple price proposition remains as appealing as ever, with like-for-like sales increasing at a steady clip even as it aggressively expands its number of stores.

“But the stand-out figure is the barnstorming 18.6% growth in pre-tax profits, which is a tribute to Poundland’s increasing scale as much as its success in improving margins.

“While it is flirting with multi-deals on some lines, its proposition remains clear and compelling — known brands for £1. This has seen it thrive through two recessions, and continues to deliver now as the low price point encourages more confident shoppers to indulge in impulse purchases.

“With their marketing focusing on quality, Aldi and Lidl have so far proved less of a threat to Poundland than they have to the Big Four grocers.

“But this is likely to be only a temporary truce. The German discounters’ growing firepower could soon be turned on Poundland. And after having things its own way for so long, this is may prove one of the toughest tests of Poundland’s defences in its 25 year history.

“With this threat just over the horizon, Poundland's planned acquisition of 99p Stores — which would bring a 50% increase in the number of stores — risks being an overextension.”