The highs street discount chain Poundland has taken a £640 million hit due to soaring costs because of the Autumn Budget which has led to a slump in sales.
In the year to 30 September Poundland owner Pepco took a £457 million pre-tax loss against profits of £131 million the previous year.
Poundland said there was a “significant decline in performance in 2023-24 and weaker outlook for profitability amid increasing competitive and cost challenges.”
The discount retailer said they are facing “higher cost outlook in the UK following the recent Budget,” after Rachel Reeves announced an increase in the minimum wage and employees national insurance contributions with take effect from April 2025.
Stephan Borchert, chief executive of Pepco, said, “At Poundland, recent performance has been very challenging, impacted by declines in clothing and general merchandise following the transition to Pepco-sourced product ranges at the start of the year.
“We are taking swift action to get Poundland performance back on track, focusing on a return to Poundland’s strengths.”
They added, “It became clear as the year progressed that both the planning and execution of this implementation had shortcomings, with gaps in clothing and general merchandise product for the UK customer, impacting revenues and profitability during the year.
“It further became clear that our UK customers had a different expectation of the Poundland brand proposition compared with Pepco customers which has led to a fundamental rethink of approach going forward.”
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