Shares in Poundland (LON:PLND) fell over 18 percent this morning after releasing disappointing interim results, sparking debate that their single price model is failing to provide profit against inflation.

Underlying pre-tax profits fell 26.3 percent to £9.3 million, which CEO Jim McCarthy put down to the opening of 55 new stores in Britain during this period, compared to just 34 last year.

“Sales comparables in the second half are softer and our Christmas range is our best ever. However, we have seen highly volatile trading conditions so far in the third quarter,” Chief Executive Jim McCarthy said.

Poundland first listed on the stock exchange in March last year at 300 pence, and the company recently purchased rival 99p Stores for £55 million. Chairman Darren Shapland said:

“We traded through the first half against an exceptional period last year. We opened a net new 52 shops in the half and are well placed for our critical third quarter, in addition 99p Stores will be an excellent accretive acquisition.”

The 99p Stores acquisition added 252 stores to about 600 Poundland stores in the UK and nearly 60 shops in Ireland and Spain. Poundland is currently trading down 17.9 percent at 228.70 pence per share. (1245GMT)

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