Poundstretcher brand to check out after sales fall
Poor Christmas trading stalls value retailer’s recovery
January 7 2003
Value retailer Brown & Jackson has warned of a shortfall in profits after poor Christmas trading at its core Poundstretcher chain.
With sales stronger at its new Instore brand, Brown & Jackson is stepping up the revamp of its estate, aiming to replace the 300-plus Pounstretcher stores with the new brand inside three years.
The company said December sales were below expectations, with like-for-likes down 8.5 per cent, and a generally poor performance in its High Street outlets.
Margins were better as Poundstretcher resisted the urge to discount during December, and stock levels were higher mainly due to a planned increase in stocks of core product lines.
Total sales in the 13 weeks to January 3 were down 4.5 per cent, with like-for-like sales down 6.3 per cent.
The Instore brand, which is being piloted at seven sites, achieved like-for-like sales growth of 12 per cent in December and 13 per cent across the quarter, with better margins than at Poundstretcher. The company said: “We are delighted with this performance and Instore will be progressively rolled out starting in spring of 2004, with a three year objective of replacing the Poundstretcher fascia.”
Warning that the group’s performance will fall significantly short of market expectations for the full year, Brown & Jackson said it is “unlikely that the company will report a profit in this financial year”, and said that its recovery programme has been delayed by a year. “However, we are more optimistic that the benefits of the turnaround will start to be more fully reflected in 2004/05.”
Chief Executive Angus Monro said: “Christmas trading was disappointing, however, these are early days in the turnaround of the business. We are continuing to make improvements to our stores, processes and products.
“The Instore pilot stores have already shown a marked improvement in sales growth compared to last year and the strategic direction for the business is clear. Our commitment to building on our progress to date gives us confidence in the long term prospects for the group.”
Brown & Jackson said January sales are in line with expectations so far, with better margins reflecting lower markdowns.
