Poundland today announced plans to close 68 stores and two UK warehouses as part of a restructuring plan after being sold to investment firm Gordon Brothers.
The discount chain, known for primarily selling products for £1 at its 800 shops, had been put on the market earlier this year after a sharp downturn in trading.
Poland-based Pepco Group, which has owned Poundland since 2016, said last Thursday it had sold the business for a ‘nominal’ fee – which sources said was £1.
Poundland’s stores and roughly 16,000 employees will be transferred to the ownership of Gordon Brothers, the former owner of Laura Ashley, as a result.
This morning, as part of the deal, Poundland – which was founded in 1990 – has announced the details of a restructuring plan which will go through the High Court.
This will include the closure of 68 stores along with its frozen and digital distribution centre in Darton, South Yorkshire, which will shut later this year and its national distribution centre at Springvale Bilston in the West Midlands early next year.
Deliveries are instead going to be ‘absorbed’ into its existing distribution centres at Wigan in Greater Manchester and Harlow in Essex, according to the company.
Around 350 people will be affected by the warehouse closures, but the company has not disclosed how many store workers will be impacted by the 68 set to be shut.
Poundland will also stop selling frozen food in stores where it is currently available.
Poundland had been put on the market earlier this year after a sharp downturn in trading
Poundland managing director Barry Williams said the company’s performance had ‘fallen short of our high standards and action is needed to enable the business to return to growth’
There will also be a reduction in the chilled food available which will instead ‘be anchored around its market-leading £3 meal deal and other essentials such as milk’.
The firm said the Poundland.co.uk website will be converted ‘from a transactional website to a brand website’, and there will be a ‘retirement’ of its Perks app.
In addition, there will also be a ‘greater depth’ of womenswear in the clothing range and the return of ‘key seasonal general merchandise ranges’ as well as the ‘restoration of product categories customers have missed’.
Barry Williams, managing director of Poundland, said today: ‘It’s no secret that we have much work to do to get Poundland back on track.
‘While Poundland remains a strong brand, serving 20million-plus shoppers each year, our performance for a significant period has fallen short of our high standards and action is needed to enable the business to return to growth.
‘It’s sincerely regrettable that this plan includes the closure of stores and distribution centres, but it’s necessary if we’re to achieve our goal of securing the future of thousands of jobs and hundreds of stores.
‘It goes without saying that if our plans are approved, we will do all we can to support colleagues who will be directly affected by the changes.’
Poundland added that ‘impacted creditors have been contacted to inform them of the plan and the court timetable is expected to conclude in late summer’.
It also said the court-sanctioned process applies to creditors in the UK, and does not cover Poundland’s operations in the Republic of Ireland or Isle of Man, where it trades as ‘Dealz’ – nor trade suppliers in either the UK or Republic of Ireland.
As part of the restructuring plan, Pepco is set to retain a minority stake in Poundland.
Gordon Brothers said last week that it is providing up to £80million of financing to help fund the turnaround plan.
Last month, Poundland reported revenues dropped by 6.5 per cent to €985million euros (£830million) for the six months to March, compared with a year earlier.
The brand suffered ‘challenges across all categories’ and had 18 net store closures over the period.
Pepco said last week that the deal will help it shift away from food and drinks, improve its revenue growth and boost its profitability.
