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Poundland sold in £200 million deal

Private equity group Advent today sold Poundland to rival Warburg Pincus in a deal which is said to be worth £200 million. The bosses of the operation will receive a £20 million windfall although a number have decided to reinvest under the new owner to take a 25% stake in the business. This is just the latest example of cut-price goods proving very defensive during a recession which has seen business thrive.

Despite the fact that companies such as Poundland appear to go against all "retail rules" they have attracted massive interest of late. Charging just one pound for a large range of different products has proved very attractive to battle hardened consumers who are struggling to make ends meet during these difficult financial times. In the 12 months to March 2009 sales at Poundland increased from £330 million to £400 million and earnings increased by 27% to £20 million.

The new owner of Poundland is expecting sales to hit around £700 million in 2011 and we can only guess what kind of profitability this may bring in for the operation. While the cut-price goods and services market is literally cutthroat, those who are able to target their goods and services at the right price stand to benefit in the short, medium and longer term.

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