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UK discount retailer Poundland has been sold for less than £1 to Gordon Brothers, an investor that specialises in acquiring distressed assets, after a series of costly mis-steps by its Warsaw-listed parent.
Pepco Group said it had sold the struggling retailer for a nominal consideration — or €1 (85p), according to a person familiar with the deal.
The company will support the business by rolling over an existing secured loan of €30mn and providing an overdraft of up to €30mn.
The overdraft will become available upon completion of a proposed restructuring plan, which is expected to lead to the closure of some of Poundland’s 825 stores and job losses. The chain employs 16,000 people.
Poundland has endured a disastrous spell of trading after Pepco’s decision to replace its clothing and homeware ranges with the same products it sells in its business in continental Europe. The chain’s sales fell by 6.5 per cent over the six months to March 31.
The discounter was founded by Dave Dodd and Steven Smith in 1990 and became popular with shoppers for selling all of its items — spanning toothpaste, confectionery and laundry detergent — at a single price of £1.
However, it has struggled with competition from B&M, Home Bargains, Aldi and Lidl, as well as rising costs, which forced it to abandon its £1 price point. A rise in theft during the cost of living crisis also hit Poundland particularly hard. Wilko, another UK discounter, collapsed into administration in 2023.
Poundland will continue to be led by Barry Williams, its current managing director. Gordon Brothers, the former owner of Laura Ashley, said it would provide up to £80mn “to support the management team’s proposed restructuring and turnaround plan”.
It gave no details of Poundland’s restructuring plan, which is subject to approval by England’s High Court.
Pepco Group, which also owns the Pepco and Dealz brands in Europe, said the sale of Poundland would allow it to focus on Pepco, its higher-margin clothing and general merchandise business.
Poundland was a strong brand with about €2bn of annual sales, the company said. But it was also operating in an “increasingly challenging UK retail landscape”, and the challenges were “only intensifying”.
Pepco’s shares have fallen from a peak of more than 56 zlotys (€12.30) in August 2021 to about 18 zlotys this year.
