Poundland has filed a notice of intention to appoint administrators after its US-based owner Gordon Brothers cut off vital funding and rejected a takeover offer, leaving the retailer's 12,000 staff facing an uncertain future. Prime Minister Andy Burnham said the government was "ready to support" Poundland workers and called for answers about why the acquisition offer from Irish firm Martin Property Group had been rejected. Business Secretary Jonathan Reynolds said he was "very much concerned" by the uncertainty surrounding the business.
The discount chain has 10 days to find a rescue deal following the filing. Managing director Barry Williams told staff that Gordon Brothers had restricted Poundland's access to funds needed for day-to-day operations despite the chain's strong sales performance. Williams described the situation as "unexpected, unwanted and wholly avoidable", adding that Martin Property Group's offer was a "fully funded, ready to go bid that would have kept the business intact". Three independent directors appointed to oversee a sale resigned immediately after disagreeing with Gordon Brothers' decision to reject the solvent offer.
Gordon Brothers, which bought Poundland from Polish retail group Pepco for £1 last year, wants to break up the business. It is understood that rivals Poundstretcher, B&M and Lidl are among more than half a dozen retailers interested in potentially buying individual stores. According to an insider, Poundstretcher owner Fortress is interested in taking on between 200 and 250 stores, while another large retailer is understood to be interested in more than 100 sites. Poundland could still be purchased as a going concern through a pre-pack administration deal, but breaking it up and selling stores separately appears the most likely outcome.
Bally Auluk, national officer at shopworkers' union Usdaw, said the week had been "incredibly distressing" for staff and criticised Gordon Brothers for "jeopardising" livelihoods. He claimed the company was attempting to extract £30m from a business it acquired for £1 and urged the owner to reconsider. Staff at Poundland's customer support centre in Walsall staged a protest on Thursday. Poundland, founded in 1990, operates around 600 stores across the UK and Ireland, where it trades as Dealz, and serves around 20 million customers annually.
For savers, borrowers, business owners and investors, Poundland's potential collapse highlights the risks faced by UK retailers struggling with cost pressures even during a period of weak consumer spending.