Poundland has secured additional time to find a rescue buyer after its owners released £10m in previously frozen cash, potentially staving off an imminent collapse that would have threatened 11,000 jobs. The retailer was facing administration after Gordon Brothers, its US owner, blocked access to funds needed to restock stores ahead of the crucial Christmas trading period. A deadline set to expire at midnight has been extended, with sources telling BBC News that the release of £10m could allow negotiations for a longer-term solution to continue.
Gordon Brothers, which acquired Poundland for £1 last year, had frozen approximately £50m that the retailer needed to pay wages, rent and replenish stock across its 600 stores. A 10-day moratorium protecting Poundland from creditors expires on Thursday, but the prospect of a solvent deal could lead to a further extension. A takeover bid was recently rejected, prompting political pressure on the owners, including calls from Prime Minister Andy Burnham for answers.
Poundland's management and owners disagree sharply over the business's prospects. Chief executive Barry Williams told staff that like-for-like sales were up 11.4% in a period that included Halloween, with the business £1.5m ahead of budget. The retailer made a profit of £18.1m in the year to September, which Williams described as a strong recovery from losses of £68m the previous year. Gordon Brothers, however, has described the chain as remaining "challenged and vulnerable to any potential downturn in future trading".
A parliamentary committee of MPs is scheduled to question Gordon Brothers on Wednesday following accusations that the investment firm intends to profit from breaking up Poundland and selling its stores and stock individually. Potential buyers including Poundstretcher, Tesco and B&M have expressed interest in acquiring stores, which could preserve some employment if the chain is dismantled rather than sold as a going concern. The central question is whether a piecemeal sale would protect more jobs than a buyer willing to operate Poundland as a unified national retailer.
For shoppers, employees and creditors, the extension provides a temporary reprieve as negotiations continue, though the retailer's long-term survival remains uncertain pending either a complete rescue deal or agreement on how assets would be distributed if the business is broken up.