Higginson was finance and strategy director for Tesco from 1997 until 2008

Higginson was finance and strategy director for Tesco from 1997 until 2008

Poundland's appointment of former Tesco finance director Andrew Higginson as its chairman is being seen as a major coup for the UK value retailer.

Higginson was finance and strategy director for Tesco from 1997 until 2008, before taking on a role of head of retailing services at the country's largest retailer and his new role at Poundland raised eyebrows in the industry this week.

"He's worked for Unilever and Burtons at senior level so he brings an awful lot of corporate experience at the highest level, be it private or public," Shore Capital analyst Clive Black told just-food today (13 July). "But don't forget he was also in charge of retailing services and strategy at Tesco, so in terms of understanding the broader spectrum of factors that go into conditioning and driving a business, he's expertly positioned."

Conlumino analyst Neil Saunders echoed this sentiment, adding that the appointment could be seen as "a professionalisation of the company".

"Poundland has seen very rapid growth and it's a very ambitious company," Saunders told just-food. "I think when you reach a certain size and you start reaching a level of seriousness, you have to have a professional structure in place and the appointment of someone like Higginson represents that step.

"He's a big hitter, very experienced and he brings a level of professionalism and insight to the team and that allows them then to expand but also it allows them to do other things, float if they wish, because it's seen as having a very credible team with some blue chip experience."

Higginson is seen as a highly respected City figure with significant contacts and was part of Sir Terry Leahy's team which turned around the fortunes of Tesco, increasing profits from GBP1bn (US$1.6m) to GBP3bn.

No wonder then that speculation surrounding the appointment has pointed to a possible stock market listing for Poundland.

The retailer has been on a tremendous growth spurt of late. Earlier this month the group booked a 26.5% increase in full-year profits as value-conscious shoppers continued to visit its stores.

Tim McConnell, retail operations director for Poundland, told just-food the business has benefited from the tightening of the UK economy and it will consider expansion beyond its current markets.

Black, however, said he was not so sure an IPO would necessarily result from the appointment.

"Where Poundland is at the moment...it's in a reasonably rapid state of growth that it wants to focus on. There will be a change in or a confirmation of the ownership structure in Poundland in the future, but that might mean they keep the present owners, they trade sell it or they IPO it. But IPO is just one option for the future. I don't see it at the forefront of Poundland's mind or its owners mind at the minute."

Poundland may, however, be looking to use Higginson's expertise in order to stay ahead in what has become an increasingly competitive 'round price-point' market.

The UK retail market has seen a rise in the number of single-price retailers, prompting major supermarkets to revisit their offers in order to compete.

Nonetheless, Black believes Poundland has what it takes to maintain its position.

"In terms of the supermarkets, GBP1 offers are relatively peripheral in terms of the overall proposition and for Poundland it's part of what they do. The market is competitive, there are some especially able players in the high street value retail segment. The opportunity is still greater than the competitive constraints of Poundland on that front."