The owner of Poundland, one of Britain’s biggest discount retailers, has drafted in City advisers to explore radical options for arresting the growing crisis at the chain.
Sky News has learnt that Pepco Group, which has owned Poundland since 2016, has hired consultants from AlixPartners to address a sales slump which has raised questions over its future ownership.
City sources said this weekend that the crisis would prompt Pepco to explore more fundamental for Poundland, including a formal restructuring process that could prompt significant store closures, or even an attempt to sell the business.
AlixPartners is understood to have been formally engaged last week, with options including a company voluntary arrangement or restructuring plan said to have been floated by a range of advisers on a highly preliminary basis.
Sources close to the group said no decisions had been taken, and that the immediate focus was on improving Poundland’s cash performance and reviving the chain’s customer proposition.
A sale process was not under way, they added.
Poundland trades from 825 stores across the UK, competing with the likes of Home Bargains, B&M and Poundstretcher, as well as Britain’s major supermarket chains.
More from MoneyLast year, the British discounter recorded roughly €2bn of sales.
It employs roughly 18,000 people.
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Tap here to followEarlier this week, Pepco Group, the Warsaw-listed retail giant which also trades as Pepco and Dealz in Europe, said Poundland had seen a like-for-like sales slump of 7.3% during the Christmas trading period.
In its trading statement, Pepco said that Poundland had suffered “a more difficult sales environment and consumer backdrop in the UK, alongside margin pressure and an increasingly higher operating cost environment”.
“We expect that the toughest comparative quarter for Poundland is now behind us – the same quarter last year represented a period prior to the changes made within our clothing and GM [general merchandise] ranges – and therefore, we expect the negative sales performance for Poundland to moderate as we move through the year.”
It added that Poundland would not increase the size of its store portfolio on a net basis during the course of this year.
“We are continuing a comprehensive assessment of Poundland to recover trading and get the business back to its core strengths, including undertaking a thorough assessment of all costs across the business, as well as evaluating its overall competitive positioning,” it added.
The appointment of AlixPartners came several weeks after Stephan Borchert, the Pepco Group chief executive, said he would consider “every strategic option” for reviving Poundland’s performance.
He is expected to set out formal plans for the future of Poundland, along with the rest of the group, at a capital markets day in Poland on 6 March.
Among the measures the company has already taken to halt the chain’s declining performance have been to increase the range of FMCG and general merchandise products sold at its traditional £1 price-point.
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 capitalisation equivalent to about £1.7bn, declined to comment further on the appointment of advisers
AlixPartners also declined to comment.