Poundland sold for £1 and faces major store closures
- Poundland completed the sale to Gordon Brothers for a nominal fee of £1, following years of ownership by Pepco Group.
- The company is set to undergo a major restructuring that may involve the closure of around 100 stores.
- This move aims to improve profitability and adapt to current market challenges, with implications for approximately 16,000 employees.
Poundland, a high street discount chain in the UK, has been sold to the investment firm Gordon Brothers for just £1 following a restructuring initiative. This acquisition comes after the company faced mounting financial pressures, with revenues declining by 6.5% to 985 million euros for the six months ending in March. The brand, with over 800 stores and approximately 16,000 employees, is set to undergo significant changes, including the closure of around 100 outlets in a move aimed at improving profitability. These details were shared as Poundland prepares to notify its creditors in the coming days. The sale by the Polish-based Pepco Group, which owned Poundland since 2016, was part of a strategy to pivot away from food and drink sales and enhance revenue growth. This decision reflects the challenges Poundland has experienced across its product categories, leading to net store closures during the previous fiscal period. The chief executive of Pepco Group, Stephan Borchert, expressed gratitude towards the Poundland team, emphasizing the positive impact this move would have on their ongoing value creation program. As a condition of the deal, Gordon Brothers seeks to implement a restructuring plan that coincides with the high court's approval. The restructuring will include efforts to negotiate rent reductions with landlords, thereby easing the financial burden on Poundland during this transitional period. Details of the restructuring are expected to be shared with creditors soon as Poundland positions itself for recovery under its new ownership. Investment firms and private equity groups had shown interest in acquiring Poundland since it was put on the market earlier this year. The firm appears to be focusing on revitalizing its operations and stabilizing its financial outlook amidst a turbulent retail environment. The future trajectory of Poundland will depend on the execution of the planned store closures and restructuring as the company transitions under new management.