Value specialist 99p Stores is to review its ownership structure, potentially resulting in a sale as early as next summer or a flotation in the next three years.
The retailer, which has benefited in the recession as consumers increasingly seek out value, has been expanding rapidly and expects to open 48 stores in the current financial year, taking its count to 120.
99p Stores buying director Faisal Lalani said he would want 150 shops “before entertaining any offers to buy the business”.
He said: “We’ll be at 150 by the middle of next year. But if we don’t get any good offers I wouldn’t be surprised if we went down the route of an IPO within three years.”
Lalani said the advantages of a flotation would include more investment, as well as the Lalani family being able to retain a stake and an element of control in the business.
99p Stores aims to have turnover of £300m turnover this time next year. “Then I’ll be in the market for offers,” Lalani said. In the 12 months to January 31, turnover increased from £94m to £113m and like-for-like sales climbed 4.3%.
Lalani said the aim is to “catch up” with Poundland, which has 223 stores and has also been expanding to tap shoppers’ flight to value.
Interest in the value sector is likely to be stimulated by developments in the US, where discount retailer Dollar General’s owner, private equity firm KKR, intends to float the group.
A PricewaterhouseCoopers report released this week showed that sales in UK discount stores almost doubled between 2003 and 2008 to nearly £3bn. The market is likely to be worth more than £4bn by 2012.
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