The owner of Poundland, one of Britain’s biggest discount retailers, has called on city councilors to explore radical options to end the growing crisis at the chain.
Sky News has learned that the Pepco Group, which has owned Poundland since 2016, has hired consultants from AlixPartners to deal with a decline in sales which has raised questions over its future ownership.
City sources said this weekend that the crisis would prompt Pepco to explore more fundamental solutions for Poundland, including a formal restructuring process that could lead to significant store closures or even an attempt to sell the company.
AlixPartners was reported to have been formally engaged last week, with options including a company voluntary agreement or restructuring plan said to have been put forward by a series of advisers on a very preliminary basis.
Sources close to the group said no decisions had been made and the immediate priority was to improve Poundland’s cash flow performance and revive the chain’s customer offering.
No sales process is underway, they added.
Poundland has a presence in 825 stores across the UK, competing with the likes of Home Bargains, B&M and Poundstretcher, as well as major UK supermarket chains.
Last year, the British discounter recorded around 2 billion euros in sales.
It employs around 18,000 people.
Earlier this week, Pepco Group, the Warsaw-listed retail giant which also trades under the Pepco and Dealz names in Europe, said Poundland had seen its like-for-like sales fall by 7.3%. during the Christmas period.
In its trading statement, Pepco said Poundland had suffered “from a more challenging sales and consumer environment in the UK, alongside margin pressure and an operating cost environment of higher and higher.”
“We expect that the most difficult comparative quarter for Poundland is now behind us – the same quarter last year was a period before changes to our clothing and GM (general merchandise) ranges – and we we therefore expect negative sales performance for Poundland. to be moderated as we progress through the year.
He added that Poundland would not increase the size of its store portfolio on a net basis during this year.
“We are continuing a comprehensive assessment of Poundland to restart trading and return the business to its core strengths, including undertaking a thorough assessment of all costs of the business, as well as assessing its overall competitive positioning,” a- he added.
The appointment of AlixPartners comes weeks after Stephan Borchert, the Pepco group chief executive, said he would look at “all strategic options” to revive Poundland’s performance.
He is expected to present formal plans for the future of Poundland, along with the rest of the group, at a capital markets day in Poland on March 6.
Among the steps the company has already taken to halt the chain’s declining performance is increasing the range of FMCG and general merchandise sold at the traditional price of £1.
Poundland’s crisis contrasts with the health of the rest of the group, with Pepco and Dealz both showing strong sales growth.
A spokesperson for Pepco Group, which has a market capitalization of around £1.7 billion, declined to comment further on the appointment of the advisers.
AlixPartners also declined to comment.