Poundworld adds to High Street massacre
Written by vitalize on 12th May 2018
Poundworld, a well know discount retailer has announced that it is up for sale. The news comes following an unsteady market for several other high street retailers.
The company has been put up for sale by its owner – private equity firm TPG.
It is believed that the chain were looking to close around 100 of its stores, leaving approximately 250 on the high street. This comes following a tough period for many other retailers.
After expressions of interest in the company, US owner TPG have now put the restructuring plans on hold.
More than 5,550 people are said to be employed by Poundworld across its stores.
Poundworld adds to the list of many other retailers that are struggling in recent times. This is due to falling consumer confidence, a rise in overhead costs, the weakening of the pound and a rise in the level of online shopping by consumers.
As the chain imports a lot of its stock, they’re currently having to pay more for it due to the fall in value of the pound.
It is believed that the process of finding a buyer will happen over a short timeframe, which will allow the new buyer to continue restructuring the company if found necessary.
Poundworld had been expected to announce the terms of that process – known as a Company Voluntary Arrangement (CVA) later this month.
CVA‘s have become popular among retailers as they allow companies to offload any underperforming stores and reduce rents whilst avoiding administration.
Poundworld was formed officially in 2004, but has said that it can trace its origins “back to 1974, with a market stall in Wakefield, West Yorkshire.”
Private equity firm TPG Capital which in 2015 bought a majority stake in Poundworld also controls restaurant chain Prezzo, whose landlords agreed to a CVA just last month, this leads to the closure of 94 of its branches.
Several other retailers have chosen to go through a CVA following tough times, including New Look and Carpetright. House of Fraser is also expected to make a formal CVA proposal just next month, with a full restructuring in place by early 2019.
Also this year, both Toys R Us UK and electronics chain Maplin went into administration.
Many other retailers including B&Q are also looking to cut costs where possible having recently cut around 200 Head Office and Management roles in January. Chief Executive, Veronique Laury, has said she expects to see a reduction in stock keeping units (SKUs) and more urban stores over the next three to five years.
B&Q saw total sales decline by 5.3% to £3,488 million in the year to 31 January 2018, reflecting annualisation of the completed store closure programme.