Poundstretcher prepares for branded price rises

The CEO of Poundstretcher has warned that some of the retailer’s product prices are set to rise in the run-up to Christmas, but has pledged to “absorb some of the potential cost rises” from big brands including Coca Cola, Fox’s, Kellogg’s and Heinz. Aziz Tayub said: “We do not see our prices going up as much as others partly because we are very careful about what we buy. We have had a lot of negotiations over food and toiletry supplies from the UK over potential price increases in the next few months – brands such as Coca Cola, Kellogg’s, Heinz, Britvic and Fox’s biscuits. “I understand there will be increases of 3-5 percent in the next few months and I think it’s more down to worldwide raw material costs. Here in the UK the labour shortage and higher energy costs will affect us later on and maybe some of our suppliers are trying to anticipate that too.” He also assured that the group had no shortage of stock, and that it has “plenty of imported stock and plenty of UK stock, which is enough to fulfil our sales targets right up to next March”. His comments come as the group has reported “strong” sales in its half-year results, recording sales of £140m in the last six months to the end of September, despite a prior company CVA and additional external cost pressures over the period. The group is now “cautiously” predicting pre-tax profits of £40m for the full current financial year, which it attributed to lower rents and fully re-stocked warehouses. Looking ahead, Tayub warned that there “might be a second price increase at some point, which would be when we have to act”, adding that the group may be affected by the difficulty in finding alternative suppliers for branded products. Nonetheless, he said that Poundstretcher’s small fleet of 30 trucks has “not been adversely affected” by ongoing HGV driver shortages. He said: “We are in the discount sector so are a little bit more secure. People come to us because our range is getting better and our prices are reasonable. We also do not have the issues other players will have, like supermarkets, who constantly have to refill their shelves with food and toiletries. We might have lost a couple of HGV drivers, but we have replaced them. “We use a small number of hauliers, particularly in Scotland, but they have been very good with us because they are medium and small transporters and their prices have not gone up. It’s never going to be easy, but we are confident in our businesses because we have the right model, the right strategy and the right offering for the customer.”