Poundland sale puts 200 stores and thousands of jobs at risk
Up to 200 Poundland stores could be shuttered and thousands of jobs put at risk as the struggling discount retailer’s sale process enters a critical phase.
Up to 200 Poundland stores could be shuttered and thousands of jobs put at risk as the struggling discount retailer’s sale process enters a critical phase.
The latest bids for the business are expected early this week ahead of an update from parent company Pepco Group, which will report its half-year results on Thursday.
Poundland has been up for sale since March, with the process being led by advisers at Teneo. A deal is expected to be finalised by September, in time for Pepco’s full-year results.
The retailer currently operates 825 stores and employs around 16,000 people. However, up to 200 loss-making stores have been identified as potential closures under the terms of any prospective deal, according to reports in The Sunday Telegraph.
The chain has been hit by rising costs, fierce competition from supermarkets, and a faltering clothing offer. In 2017, it moved away from its iconic £1 price point to a multi-price format, with products now ranging between 50p and £5.
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The shortlist of bidders includes turnaround investors Gordon Brothers, Hilco Capital, Endless and Modella Capital — the private equity firm behind The Original Factory Shop and WHSmith’s high street business.
A spokesperson for Pepco Group said: “As announced at the capital markets day on March 6, Pepco Group is moving away from fast-moving consumer goods to create a simpler business focused on higher-margin clothing and general merchandise and is actively exploring separation options for Poundland, including a potential sale, from the group.”
He added: “With Barry Williams’ reappointment as managing director, Poundland is executing a turnaround programme to get the business back on track, focusing on its core heritage strengths and a simpler pricing proposition and customer offer.”
Pepco had previously said the UK chain had been a “drag on the group’s financial performance, with lower revenue growth, lower gross margins, higher costs to operate and, consequently, lower profitability and returns on invested capital compared with Pepco”.
Although Poundland brought in around €2bn in revenue last year, Pepco warned that the “increasingly challenging” UK retail market and additional cost pressures from the government’s latest budget had made the business less sustainable.
A sale is also expected to trigger a cash injection and debt refinancing.
Pepco is separately weighing a potential separation of its Dealz Poland brand as it sharpens focus on its flagship Pepco fascia across central and eastern Europe, which currently spans 3,845 stores.
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