Poundland Restructuring Plan Approved; Store Closures To Go Ahead

Poundland has received High Court approval for its restructuring plan, saving it from entering administration.

The High Court was told that approval of the turnaround plan would see the company benefit from a significant cash injection. Without the approval - which allows the business to close 68 stores and negotiate rent reductions on others - Poundland was initially expected to have run out of money by 7th September, and it is now understood that the directors would have placed it into administration by Friday of this week. 

Barry Williams, Poundland's Managing Director, said that the decision would "stabilise the business", stating that the focus would now be on getting Poundland "back to growth", and "creating the simpler and more focused Poundland we know our customers are eager for us to deliver". 

He added: "Despite the opportunity this ruling provides, I'm extremely mindful of its consequences for our colleagues - especially those leaving us as we streamline our store estate, distribution network and support teams." .

Tom Smith KC, acting for Poundland Limited, told the court that the value retailer's financial position had "significantly deteriorated during the last two years", advising that the business had "performed poorly in a difficult retail and economic environment".

Currently, Poundland operates from c.800 stores and employs around 14,700 people.  

In June this year, private equity company Gordon Brothers bought Poundland from Pepco Group for the nominal sum of £1.  A week later, Poundland revealed the details of its recovery plan to return the business to growth, intended to deliver a financially sustainable operating model for the business after an extended period of under-performance.

The plan included the following:

• The closure of 68 stores and rent reductions across a number of other locations which will result, over time, in an anticipated network of around 650-700 stores.
  
  
• Poundland’s withdrawal from the retail sale of frozen food in the stores where it’s currently offered.
  
  
• The reduction of its chilled food offer which will in future, be anchored around its market-leading £3 meal deal and other essentials such as milk.
  
  
• The closure of Poundland’s frozen and digital distribution centre at Darton, South Yorkshire later this year and its national distribution centre at Springvale in Bilston, West Midlands in early 2026. Delivery volumes from a streamlined Poundland will be absorbed into its existing distribution centres in Wigan and Harlow. 
  
  
• The simplification of Poundland’s digital presence, converting Poundland.co.uk from a transactional website to a brand website, and the retirement of its Perks app as the business focuses on its instore offer for customers. 
  
  
• The return of ranges lost during the transition to Pepco-sourced products – for example a greater depth of womenswear in its clothing offer, the return of key seasonal general merchandise ranges and the restoration of product categories customers have missed. 

Around 1,000 jobs are thought to be at risk. 

Dozens of stores have already closed, but Poundland is now able to exit those leases and continue closing other stores.

Stores that have already closed:

• Ammanford, Wales
• Birmingham Fort Shopping Park, West Midlands
• Cardiff, Wales
• Cramlington, Northumberland
• Leicester, Leicestershire
• Long Eaton, Nottinghamshire
• Port Glasgow, Scotland
• Seaham, County Durham
• Shrewsbury, Shropshire
• Tunbridge Wells, Kent
• Bedford, Bedfordshire
• Bidston Moss, Merseyside
• Broxburn, Scotland
• Craigavon, Northern Ireland
• Dartmouth, Devon
• East Dulwich, Greater London
• Falmouth, Cornwall
• Hull St Andrew retail park, East Yorkshire
• Newtownabbey, Northern Ireland
• Perth, Scotland
• Poole, Dorset
• Sunderland Pallion retail park, Tyne and Wear
• Stafford, Staffordshire
• Thornaby, North Yorkshire
• Worcester, Worcestershire
• Brigg, North Lincolnshire
• Canterbury, Kent
• Coventry Hertford Street, West Midlands
• Newcastle Killingworth Centre, Tyne and Wear
• Kings Heath, West Midlands
• Peterborough Orton Gate shopping centre, Cambridgeshire
• Peterlee, County Durham
• Rainham, Kent
• Salford, Greater Manchester
• Sheldon, West Midlands
• Wells, Somerset
• Whitechapel, Greater London
• Swiss Cottage, Greater London
• Southampton West Quay, Hampshire
• Chiswick, Greater London

Stores expected to close on Sunday 31st August:

• Blackburn, Lancashire
• Cookstown, Northern Ireland
• Erdington, West Midlands
• Kimberley Nottingham, Nottinghamshire
• Horsham, West Sussex
• Hull Kingston retail park, East Yorkshire
• Kettering, Northamptonshire
• Omagh, Northern Ireland
• Shepherd’s Bush, Greater London
• Southport, Merseyside
• Taunton, Somerset

Stores expected to close on Sunday 14th September:

• Irvine, Scotland

A further 16 stores will close but their locations have yet to be confirmed.

Comment

Frank Bouette, a partner at city law firm DMH Stallard and restructuring and insolvency specialist, said:

"The convenience of competitive online retailers doesn’t allow room for manoeuvre or strategy errors. 

"Add in rising costs, declining sales, a change in ownership and operational challenges, plus resulting financial impairments, and it’s a perfect storm.   

"A hard and focused restructure is required if the brand is to survive."

Source : Insight DIY

Image : nrqemi / shutterstock / 1223281819 

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