Poundland: TOFS owner Modella drops out of auction

The Original Factory Shop owner Modella Capital has been eliminated from the auction of Poundland.

The discounter’s parent company Pepco Group is said to have shortlisted Hilco, the former owner of HMV and Homebase, and former Laura Ashley-owner Gordon Brothers, Sky News reported.

It is understood that a decision on a preferred bidder for Poundland was likely to be made within days.

If a deal is agreed with either of the shortlisted bidders, the new owner would be required to repay roughly £30m of debt owed to Pepco.

Pepco downgraded Poundland’s profit guidance for the year, blaming “highly challenging trading conditions, which have been further impacted by clearance of old stock and product availability issues”.

The retailer is expected to deliver an underlying EBITDA of between £0m and £16.8m (€20m), compared to the previous guidance of £42.1m (€50m) to £59m (€70m).

It is thought that roughly 100 of Poundland’s stores could be earmarked for closure by a the retailer’s new owner given their poor performance.

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