Poundland sales and profits fall amid Steinhoff takeover move

Takeover target Poundland has posted a slump in annual profits after a "challenging but transformative" year as its suitor stepped up its pursuit with a 23% stake in the business.

South African retail group Steinhoff - which owns UK furniture firm Harveys and Bensons For Beds - revealed late on Wednesday that it had bought 61.2 million ordinary shares in the budget retailer and confirmed any potential offer would be made in cash.

Its bid interest comes after a testing time for Black Country-based Poundland, which had seen its shares slump by a third in a year following tough trading and a difficult takeover of rival 99p Stores.

Annual results laid bare the group's sales woes as underlying pre-tax profits fell 13.5% to £37.8 million in the year to March 27.

Bottom-line pre-tax profits crashed 83.7% to £5.9 million, but this includes converted 99p Stores.

Poundland, founded in the Black Country two decades ago, employs around 700 at its headquarters beside the Black Country Route in Willenhall and at its major distribution depot in Bilston. Following the 99p Stores deal it has nearly 900 stores in the UK and Ireland.

Poundland has advised shareholders to "take no action" following Steinhoff's announcement on Wednesday that it is considering a bid.

The move marks the latest takeover attempt by Steinhoff, after it lost out in a battle with Sainsbury's to buy Argos owner Home Retail Group in March and was outbid for London-listed white goods retailer Darty.

Steinhoff has until 5pm on July 13 to make a firm bid for Poundland or walk away under City takeover rules.