Poundland is getting ready to attract on emergency funding after a disappointing Christmas buying and selling interval intensified considerations over the low cost retailer’s restoration.
The chain is about to faucet a £30m overdraft facility supplied by its former proprietor, Pepco, after festive footfall and gross sales fell wanting expectations. The transfer follows a tricky few months for the retailer, which was rescued in the summertime by distressed funding specialist Gordon Brothers in a court-approved restructuring deal.
Gordon Brothers acquired Poundland for a nominal £1, a transaction that safeguarded nearly all of its 16,000 jobs throughout 825 UK shops but in addition paved the way in which for widespread closures. Underneath the phrases of the deal, Pepco agreed to supply monetary assist, together with a direct £30m mortgage and an extra £30m credit score facility within the type of an overdraft.
Since taking management, Gordon Brothers has closed two warehouses and shut 68 of Poundland’s worst-performing shops, placing greater than 2,000 roles in danger, because it makes an attempt to stabilise the enterprise and return it to profitability.
Nevertheless, buying and selling situations deteriorated additional over the Christmas interval. Knowledge from Sensormatic reveals that UK excessive avenue footfall was down 13 per cent year-on-year on December 23, usually one of many busiest purchasing days of the calendar. Retailers are additionally bracing for a weak begin to 2026, with the Confederation of British Business reporting that gross sales expectations at the moment are at their lowest degree since March 2021.
Towards this backdrop, Gordon Brothers knowledgeable Pepco in latest weeks that it meant to entry the overdraft facility after revenues fell under forecast, making a short-term liquidity squeeze. Poundland plans to attract down the funding in two levels, with an preliminary tranche in January and additional entry later within the 12 months.
Pepco is known to have initially resisted the request, fuelling recent questions over Poundland’s longer-term prospects, however settlement was finally reached at board degree, easing instant considerations over the retailer’s money place.
A staff of advisers is intently monitoring the turnaround. Gordon Brothers has introduced in forensic accountants from AlixPartners to supervise money circulate, whereas Poundland’s board has appointed FRP Advisory as specialist company finance advisers.
Underneath the restructuring plan, Poundland is predicted to shut round 130 shops by February subsequent 12 months. Clearance gross sales are already beneath manner in areas earmarked for closure, with reductions of as much as 40 per cent.
Earlier this week, the retailer confirmed it will stay closed on Christmas Day, Boxing Day and New 12 months’s Day, persevering with a coverage aimed toward prioritising workers wellbeing.
A Poundland spokesperson mentioned the restructuring had supplied ample monetary headroom to implement restoration plans and pressured that the enterprise continued to obtain full backing from each Gordon Brothers and Pepco. “Whereas there stays a lot to do, we’re happy with the progress made in latest months as we work to get the enterprise again on monitor,” the spokesperson mentioned.
Pepco declined to remark.
