Poundland sold for £1 and set to shut shops in restructuring

Poundland is set to shut dozens of stores after being sold for £1 to investment firm Gordon Brothers.

The discount chain, known for primarily selling products for £1, had been put on the market earlier this year after a sharp downturn in trading.

Poland-based Pepco Group, which has owned Poundland since 2016, said on Thursday it completed the sale of the business for a “nominal” fee. Sources close to the process have said this was £1.

Poundland’s more-than-800 stores and roughly 16,000 employees will be transferred to the ownership of Gordon Brothers, the former owner of Laura Ashley, as a result.

However as part of the deal, Poundland is set to undergo a restructuring plan, which will go through the High Court.

Poundland said the details will be communicated “in due course”.

It is understood full details of the shake-up will be sent to company creditors in the coming days.

The company is expected to seek around 100 store closures and a raft of rent reductions from landlords as part of the process.

As part of the restructuring plan, Pepco is set to retain a minority stake in Poundland.

Gordon Brothers has also said it is providing up to £80 million of financing to help fund the turnaround plan.

Last month, Poundland reported revenues dropped by 6.5% to 985 million euros (£830 million) for the six months to March, compared with a year earlier.

The brand suffered “challenges across all categories” and had 18 net store closures over the period.

Pepco said the deal will help it shift away from food and drinks, improve its revenue growth and boost its profitability.

Stephan Borchert, Pepco Group chief executive, said: “This transaction will strongly support our accelerated value creation programme by simplifying the group and focusing on our successful Pepco business.

“Poundland remains a key player in UK discount retail, with millions of customers annually and a well-loved brand and proposition.

“We want to sincerely thank all the Poundland team for their ongoing commitment and contribution to the group and wish Barry Williams and his team all the best for the future.”

Mr Williams, chief executive of Poundland, said: “We welcome Gordon Brothers as we focus on returning Poundland to its core heritage category strengths and place as an essential business to UK households.

“We look forward to working with our supplier base to ensure we continue providing exceptional value to budget-conscious consumers in the UK.”

Mark Newton-Jones, head of Europe, the Middle East and Africa at Gordon Brothers, said. “We believe Poundland is an essential retailer serving UK consumers and plays an important role on the high street.”