The owner of Poundland, one of Britain’s largest discount retailers, has enlisted city advisers to explore radical options to stop the growing crisis at the chain.
Sky Information has learned that Pepco Group, which has owned Poundland since 2016, has hired AlixPartners consultants to address a drop in sales that has raised questions about its future ownership.
City sources said this weekend that the crisis would lead Pepco to explore more fundamentals for Poundland, including a formal restructuring process that could lead to major store closures, or even an attempt to sell the business.
AlixPartners is understood to have formally committed last week, with a number of advisers said to have raised options including a company voluntary arrangement or a restructuring plan on a very preliminary basis.
Sources close to the group said no decisions had been made and the immediate focus was on improving Poundland’s cash performance and reviving the chain’s proposition to customers.
There was no sales process taking place, they added.
Poundland trades from 825 stores across the UK, competing with the likes of Dwelling Bargains, B&M and Poundstretcher, as well as Britain’s major supermarket chains.
Last year, the British discounter recorded approximately €2 billion in sales.
It employs approximately 18,000 people.
Earlier this week, Pepco Group, the Warsaw-listed retail giant that also trades as Pepco and Dealz in Europe, said Poundland had seen a 7.3% like-for-like sales decline over the Christmas trading period.
In its trading statement, Pepco said Poundland had suffered from “a more difficult sales environment and consumer environment in the UK, together with pressure on margins and an increasingly high operating cost environment”.
“We hope that the most difficult comparative quarter for Libra is now behind us: the same quarter last year represented a period before the changes made in our clothing and at GM. (general merchandise) ranges and therefore we expect Poundland’s negative sales performance to moderate as the year progresses.”
It added that Poundland would not increase the size of its store portfolio on a net basis over the course of this year.
“We are continuing a comprehensive assessment of Poundland to recover the trade and return the business to its core strengths, including undertaking a thorough assessment of all costs across the business, as well as assessing its core competitive positioning,” he added. .
AlixPartners’ appointment came several weeks after Pepco Group chief executive Stephan Borchert said he would consider “all strategic options” to revive Poundland’s performance.
He is expected to set out formal plans for Poundland’s future, along with the rest of the group, at a capital markets day in Poland on March 6.
Among the measures the company has already taken to arrest the chain’s declining performance is increasing the range of consumer goods and general merchandise products sold at their traditional £1 price.
Poundland’s crisis contrasts with the health of the rest of the group, with Pepco and Dealz both showing strong sales growth.
A spokesman for Pepco Group, which has a market capitalization equivalent to about £1.7bn, declined to comment further on the appointment of advisers.
AlixPartners also declined to comment.
