Poundstretcher group to open 100 new stores

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Brown & Jackson, the discount retailer which runs the Poundstretcher chain, is to create 1,500 jobs over the next four years with the opening of 100 new stores.

Brown & Jackson, the discount retailer which runs the Poundstretcher chain, is to create 1,500 jobs over the next four years with the opening of 100 new stores.

Brown & Jackson already operates 604 UK stores under the Poundstretcher, What Everyone Wants and Your More Store names. It boosted its portfolio further in January with the £22m acquisition of the Famous Brunswick Warehouse, another discount retailer.

The new openings will be spread across all four chains and come after a year in which the group has already opened 84 new shops. The company yesterday set itself a target of 1,700 UK outlets.

Brown & Jackson's aggressive expansion underlines the rapid growth of the discount sector in UK retailing. Discounters like Matalan, Peacocks, and Primark have experienced strong sales growth at the expense of mid-market rivals such as Marks & Spencer, Bhs, C&A and Littlewoods.

"The new breed of retailers like Matalan, TJ Hughes and TK Maxx have moved the market," says Johann Visser, Brown & Jackson's chief executive. "They offer the customers a decent product at a decent price."

Clive Vaughan of retail analysts Retail Intelligence, said the trend was now well established. "The discounters have had a good run because the consumers can see they offer cheaper prices with no discernible difference in quality."

The discounters have grown by sourcing goods from the same kind of factories in the Far East as their larger rivals. However, they can afford to offer the goods at lower prices because their stores do not trade on prime high streets and so have cheaper rents.

Mr Vaughan added that the same trend was visible in Germany, where C&A is struggling, and in the United States, where there have been problems at Gap and JC Penney. "They have been caught in the mid-market with undistinguished merchandise."

Brown & Jackson's expansion plans came as the group reported a 33 per cent jump in full-year pre-tax profits to £31.7m. But the share fell 11p to 125.5p on disappointing sales figures. Group underlying sales rose by just 0.2 per cent in the year. In the first seven weeks of the current year, underlying sales fell by 14 per cent due to tough trading conditions. The company said the fall was partly due to the poor summer weather which has prompted other retailers to cut prices.

Mr Visser said he was confident takings at the tills would pick up later in the year. "In the autumn you are less dependent on the weather," he said. Profits have improved due to better buying terms which have boosted margins, he said.

Brown & Jackson said it was still interested in other acquisitions, having failed with its bids to buy Bhs earlier this year and Allied Carpets last year.

The cost of pulling out of the Bhs deal costs Brown & Jackson £1.1m during the year, related to losses incurred on buying a 2.9 per cent stake in Storehouse, the former parent company of Bhs."We are not constantly on the lookout but if the opportunity came along we would look at it. We want to be bigger."

Group turnover in the year rose from £339m to £388m. The dividend was increased to 3.5p per share from 2.5p.