Thousands of jobs are at risk as part of a Poundland rescue deal that could trigger sweeping store closures across the UK.
The frontrunners for the takeover of the beleaguered budget retailer have reportedly identified around 200 loss-making shops that may be shut down.
Poundland, which employees 15,000 people across 825 stores, has seen its financial fortunes plummet in recent months.
And industry sources cited by The Telegraph suggested that Poundland is now unlikely to ‘survive without a large number of store closures’, in another blow for the UK high street.
It comes as reports emerged this morning that the discount chain could be sold for a nominal fee of ‘effectively £1’.
One source told The Times this was because of the significant turnaround project that would be needed to arrest its declining performance.
US investor Gordon Brothers is believed to be in pole position to takeover Poundland – with formal offers not set to be tabled until Monday.
Interested parties reportedly also include Modella Capital, Alteri, owner of Bensons for Beds and Hilco Capital, which owns Lakeland.
Thousands of jobs are at risk as part of a Poundland rescue deal that could trigger sweeping store closures across the UK (stock photo)
The frontrunners for the takeover of the beleaguered budget retailer have reportedly identified around 200 loss-making shops that may be shut down (stock photo)
In March, Poundland’s owners Pepco put the discount chain up for sale after its financial fortunes declined. It also unveiled a plan to buy back £168m of its own stock.
Pepco previously slashed Poundland’s value by nearly £650m as it blamed spiralling costs and ‘more difficult’ trading conditions.
The retailer was also hit by Rachel Reeves’s October tax raid which increased national insurance contributions for employers alongside the national minimum wage.
The company said the changes announced by the new Labour government would be likely to cost around £10million.
The Poland-based group said at the time: ‘Poundland is a strong brand that serves millions of customers every week and had around two billion euros (£1.67 billion) in annual turnover in financial year 2024, but it is also operating in an increasingly challenging UK retail landscape that is only intensifying.
‘From April 2025, the UK Government’s additional tax changes announced in the Budget will also add further pressure to Poundland’s cost base.
‘Therefore the board is actively evaluating all strategic options to separate Poundland from group during financial year 2025, including a potential sale.’
It is expected Poundland’s new owners will give the brand a ‘significant cash injection’, as well as close stores.
Pictured: Pepco chief executive Stephan Borchert
Poundland is now trying to return to basics and offer more items for £1 or less, in a move to try and win back customers
Prospective backers have estimated that around £100million is needed to stabilise the discount chain, which is one of the staples of the UK high street.
Poundland, however, has become a huge target for shoplifters and announced last year £40million worth of stock was swiped from its shelves.
In January, the retailer announced it would invest in new anti-theft technology to try and combat the surge in opportunists attempting to steal from the discount stores.
Meanwhile Pepco reported a £548million loss for the year up to September 30.
And in the three months leading up to December, the company recorded a 7.3 per cent drop in sales, Retail Gazette reported.
The slump comes as an ambitious growth plan for the brand which saw it open 23 new stores in the last financial year.
Shoppers reported rising prices after Poundland first dropped its ‘everything’s a pound’ slogan in 2017, pricing some its products between 50p and £5.
Research by MailOnline last year showed that some items had increased by up to 50 percent in price since.
Stephan Borchert, chief executive of Pepco Group, said: ‘The board and I are actively exploring separation options for Poundland, including a potential sale, from the group, with consideration also given to the separation of the well-performing Dealz Poland over the medium term.
‘Barry Williams did a great job as managing director of Pepco, returning it to like-for-like sales growth, and I am confident he will play a pivotal role in getting Poundland back on track, given his previous success there.’
