Cut price general store Poundland could soon list on the stock market and the key question is whether the flotation price will be £1.
With the numbers for Christmas trading now totted up and showing record sales over the five week festive period, trade magazine Retail Week reckons Poundland, which prices all of its items at a pound, will be one of the first retailers to float on the stock exchange this year.
Other retailers rumoured to be sizing up the benefits of a public listing are Pets at Home, Boohoo.com, Fat Face, House of Fraser, Game, McColls, Phones 4U and Superdrug owner AS Watson.
Some of those – notably House of Fraser, Game and Superdrug – have been listed on the stock exchange before.
Poundland’s float is the one that seems to be capturing the imagination, however, after the 21st Century’s replacement for Woolworth posted sparkling sales figures earlier this week.
Gross sales in the final three months of 2013 were up 12.4% to £348.5mln, helped by a record performance over Christmas. That led to some pundits suggesting that, just as the middle classes have got over any perceived stigma attached to shopping in cut-price supermarkets such as Aldi and Lidl, so they have started to embrace the bargain bucket ethos of Poundland.
“There are structural changes underway in consumer shopping behaviour and I’m very pleased that Poundland continues to play a leading role in the growth of the discount sector,” said Poundland’s chief executive, Jim McCarthy.
While the prospects of a successful initial public offering (IPO) look bright for Poundland, the market is not so sure about department store group House of Fraser’s return to the stock market.
The group‘s owners are thought to prefer a trade sale but appear not to have received any acceptable offers.
“Whatever happens to the booming Retail IPO market, HOF has a difficult message to get across, namely that no trade buyer has been seriously interested in the business, despite decent-looking sales growth,” notes independent retail analyst, Nick Bubb.
However, as Poundland has demonstrated, if the price is right, the stock will sell.