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UPDATE 1-Poundland's sales growth accelerates
July 3, 2014 / 8:57 AM / in 3 years

UPDATE 1-Poundland's sales growth accelerates

* FY underlying post-tax profit 27.3 mln stg, up 25.1 pct

* FY sales 997.8 mln stg, up 13.3 pct

* Q1 sales 262.6 mln stg, up 18.0 pct

* Plans 60 new stores in 2014-15

* Shares rise up to 6.4 pct (Adds detail, CEO, analyst comment, shares)

LONDON, July 3 (Reuters) - Sales growth at Poundland , the British single price retailer that listed on the London Stock Exchange in March, accelerated in its first quarter, helped by new store openings, a later Easter and shoppers’ growing love of discounters.

The company, one of a raft of retailers to float this year and capitalise on Britain’s gradually improving economy, said on Thursday sales in its first quarter to June 29 increased 18 percent to 262.6 million pounds ($446.8 million).

That compares to growth of 13.3 percent to 997.8 million pounds in the firm’s year to March 30, which was in line with the company’s previous guidance.

“We are confident of further progress through the year whilst recognising our critical (Christmas) third quarter lies ahead of us,” Chief Executive Jim McCarthy said.

The retailer’s shares, which debuted at 300 pence on March 12 and peaked at 402 pence on the same day, were up 14.5 pence at 344 pence at 0848 GMT, valuing the business at about 860 million pounds.

Discounters are growing in popularity in Britain even though the economy is improving, as habits formed in the downturn stick. Discount grocers Aldi and Lidl grew sales by 35 percent and 22 percent over the last three months, according to industry data published on Tuesday.

“Behavioural changes of shoppers are benefiting the value sector,” McCarthy told reporters. “Value is now absolutely a badge of honour for customers across the spectrum,” he said, noting that 22 percent of Poundland’s customers are now from the more affluent “AB” demographic.

Poundland, which sells all its products at the single price of 1 pound, opened a net nine new stores in the first quarter period, taking the total to 537 stores, while sales at stores open over a year were “north of” the 1.9 percent growth achieved in the 2013-14 year, the CEO said.

Poundland made an underlying post-tax profit of 27.3 million pounds in the year to March 30 - in line with analysts’ forecasts. Underlying pretax profit rose 23.5 percent to 36.8 million pounds, while adjusted earnings per share increased 25.1 percent to 10.9 pence.

Poundland plans to open a net 60 stores in the 2014-15 year, investing 20 million pounds and creating about 1,000 jobs.

Having opened in Ireland in 2011 the group kicked-off the second leg of its international expansion under the Dealz name with the opening on Wednesday of its first Spanish store in Torremolinos.

The firm plans to open an initial 10 stores in Spain over two years and is also analysing other possible territories.

Shore Capital analyst Darren Shirley raised his pretax profit forecast for 2014-15 by 3 percent to 44 million pounds and expects the firm to pay a maiden full year dividend of 3.8 pence.

$1 = 0.5877 British Pounds Reporting by James Davey; editing by Sarah Young and Jane Merriman

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