Poundland trades up

These developments are important because they show how Poundland is gaining traction among the middle classes, who once turned their noses up at its low-brow outlets. Chief executive Jim McCarthy said the Tatler and Vogue anecdotes "really encapsulate" the structural changes underway. What happened at Target and Walmart in the US, and Primark and Aldi and Lidl in the UK, now may be happening at Poundland.

The retailer is also capitalising on a perfect storm of cost-conscious consumers, an improving economic backdrop and cheap commercial property to expand its footprint. The plan is to almost double the number of UK stores from 556 to 1,000, and to do the same in Ireland, where Poundland's 35-odd outlets trade under the 'Dealz' brand. A trial in Spain is also ongoing. As any discount retailer will tell you, the tight profit margins - which hover around 3 per cent for Poundland - make scale crucial.

Judging by the half-year results, the group is growing fast. Like-for-like sales were up 5 per cent, and the underlying pre-tax profit ballooned by more than a third to £12.6m. The second half is vital, given that around 50 per cent of group profit is made in October, November and December. Mr McCarthy was upbeat, but did caution that comparatives will grow tougher.

JP Morgan Cazenove expects underlying pre-tax profit of £45.4m for the full year, giving EPS of 13p, up from £36.8m and 10.9p in 2013-14.