Loom band drop off hits Poundland

• 19 November 2015
• From the section Business

Poundland has reported a fall in half-year profits, citing factors such as a drop off in the loom band craze and an early Easter last year for the decline.

Profits before tax fell 43.1% to £5.3m, and like-for-like sales were down 2.8%, the budget retailer said.

But its acquisition of 99p Stores had added “early sales uplifts”, said chief executive Jim McCarthy.

In addition, Poundland expects the National Living Wage to add £4m costs in the first year, he said.

The drop in profits and sales for the six months to 27 September was not a “major problem,” Mr McCarthy told the BBC.

“We flagged that the results for this half this year would be less than last year because last year was an exceptional period where we benefited from… a late Easter that had quite an impact on sales, we had unusually fewer competitor openings, we had soft comparables and we had the one-off loom band craze,” he said.

“We are, in fact, where we expected to be at this stage.

“The first half is our quieter half and the most significant contribution comes from the second half. We do operate on smaller margins… and it is about driving volumes.”

He added that the majority of Poundland employees would be affected by the introduction of the National Living Wage.

“It does add another £4m or so to the first year’s costs,” he said.

He said the firm would be “trialling a hybrid self-checkout” and installing LED lighting to reduce electricity costs as part of efforts to counterbalance the impact of the National Living Wage on the business.