Poundland avoids collapse as restructure approved

A turnaround plan at Poundland has been approved by the High Court, preventing the budget retailer from collapsing into administration.

The court heard yesterday that the restructure will inject significant amounts of cash into the business.

The budget chain was sold by Pepco to Peach Bidco, a subsidiary of US retail investment firm Gordon Brothers, for a nominal sum in June. It has nearly 800 shops and employs nearly 15,000 people in the UK and Ireland.

In June, Poundland announced it was closing 68 outlets and two warehouses, putting more than 1,000 jobs at risk.

Poundland managing director Barry Williams said the decision was “vitally important” for the retailer and it will allow it to stabilise the business, “securing the future of hundreds of stores and thousands of jobs”.

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.”

“Nevertheless, our wider attention must now turn to getting Poundland back to growth.

“In the coming weeks, we will focus on getting us back on track, revamping ranges, lowering prices and creating the simpler and more focused Poundland we know our customers are eager for us to deliver.”

Nobody appeared at the High Court to oppose the plan to restructure Poundland.

The company, established in Staffordshire in 1990, reported a pre-tax loss of £35.7 million last year and has stated that April’s rise in employers’ national insurance contributions will exacerbate its problems.

In his submission to the court, Tom Smith KC, for Poundland, said the company is currently due to repay £276.5 million in loans by 1 September. This will be delayed by three years under the restructuring plan.

It will also see the company provided with a £30m overdraft facility and have some of its rents reduced.

He added that many of Poundland’s stores were unprofitable at their current rents, with the company paying “higher than market rates” for a significant number of sites.

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