Poundland expects to be given more time to secure a buyer, with the release of £10m in funding likely to delay the discount chain’s collapse and protect its 12,000 employees.
A deadline to find a buyer for the business was due to expire at midnight, but people familiar with the situation said they expect an extension following the funding release. The retailer has been edging towards administration since its owners blocked it from accessing cash held in its bank accounts.
The 10-day moratorium protecting Poundland from its creditors expires on Thursday. It could be extended if there is a prospect of a solvent deal.
A committee of MPs is set to question Gordon Brothers, the US investment firm that owns Poundland, on Wednesday. The company faces accusations that it hopes to profit from selling off the chain’s 600 stores and stock piecemeal. Gordon Brothers, which bought Poundland for just £1 last year, is accused of forcing that outcome by restricting the retailer’s access to cash needed to restock stores and pay wages and rent ahead of the crucial Christmas trading period. The investment firm has denied the claims.
Pressure on the owners has continued after a takeover bid was rejected, prompting calls for answers from politicians including Prime Minister Andy Burnham. About £50m had been frozen by Gordon Brothers, leaving Poundland bosses unable to restock shelves across its 600 shops.
People close to the matter said on Tuesday that the £10m released by the owners, while “small in the scale of things”, could at least postpone the chain’s collapse while a longer-term solution is explored. Any extension would give management and advisers more room to negotiate with prospective buyers.
Differing views on trading performance
Poundland boss Barry Williams told staff last week that like-for-like sales, which exclude new store openings, were up 11.4%. The sales period included Halloween, and Williams said the figure was £1.5m ahead of budget. He added that the business made a profit of £18.1m in the year to September, describing it as a “strong recovery” from the previous year, when it posted losses of £68m.
Gordon Brothers has painted a different picture, saying the chain remains “challenged and vulnerable to any potential downturn in future trading”.
Poundstretcher, Tesco and B&M are among those to have shown interest in picking up Poundland stores, which could mean continuing employment for workers if the chain is broken up and sold off in chunks. The main question is whether a piecemeal sale would protect more jobs than a buyer willing to keep Poundland running as a national chain.