Poundland boss will not stay on to tackle Steinhoff bid

By James Davey

LONDON (Reuters) - The boss of Poundland (L:PLND) is not planning to delay his retirement next month even though the British discount retailer faces a possible takeover bid from South African group Steinhoff (DE:SNHG).

Steinhoff has bought 23 percent of Poundland and is considering a full cash bid for Europe's biggest single price discounter, which on Thursday reported a 13.5 percent fall in full-year profit.

"I don't see, as I sit here this morning, any change that is necessary to that plan," Jim McCarthy told reporters after Poundland published its results. McCarthy, Poundland's chief executive for the last decade, is due to step down on July 1.

McCarthy, who has a 3.5 percent stake in Poundland, declined to comment on Steinhoff's move, saying takeover rules prevented him from doing so.

Steinhoff, a $22 billion(15.54 billion pounds) furniture conglomerate, on Wednesday confirmed it was considering a full cash bid for Poundland in its latest attempt to expand in Europe.

The South African group, which owns Bensons Beds and the Harvey's furniture chains in Britain, has lost out in two other takeovers in Europe this year. It failed to win Britain's Home Retail (L:HOME), which owns Argos, and was unsuccessful in a bid for Darty (PA:DRTY) in France.

With no firm offer on the table Poundland has told shareholders to take no action.

Under British takeover rules, Steinhoff has until July 13 to announce a firm intention to bid for all of Poundland.

Poundland, which in the UK sells everything for a pound, made an underlying pretax profit of 37.8 million pounds ($53.5 million) in the year to March 27.

That was below analysts' forecasts which ranged from 39.9 million pounds to 51.8 million pounds and was down from 43.7 million pounds in 2014-15.

Poundland said it was hurt by subdued trading, adverse currency moves and the distraction of integrating the 99p Stores chain it bought for 55 million pounds last year.

"We see the current time as one of trough earnings for a group that, if it sees through its potential in the UK, Ireland and Spain, has the capability to be materially more profitable," Shore Capital analyst Clive Black said.

"No doubt shareholders will have this in mind should Steinhoff’s interest progress."

Poundland's shares were up 3 percent at 205.8 pence by 0850 GMT, valuing the business at 550 million pounds.

Though the stock is up 16 percent over the last week it is still down 34 percent year-on-year. Poundland listed at 300 pence in 2014.

Underlying sales in 2015-16 increased 9.3 percent to 1.21 billion pounds, while, sales at stores open over a year fell 3.9 percent. Underlying sales in the 11 weeks to June 11 increased 28.6 percent. The dividend was down 19 percent to 3.65 pence.

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"I would have loved to have left the business on top of frothy numbers, that's what I'm used to," McCarthy said.

But he also said after a challenging year the company would benefit from the 99p Stores chain purchase, which increases Poundland's UK and Ireland store numbers to about 900 and provides it with significant opportunities for growth.

"To have this extra firepower at a time when the market is competitive and consumers are becoming increasingly demanding I think is a good place to be," he said.