Jobs fears as Poundworld to close up to 100 stores
Discount chain Poundworld is pursuing a restructuring plan that could see it shut around a third of its stores, putting more than 1,500 jobs in doubt.
Poundworld, which has branches in Shrewsbury and Telford, is considering a so-called Company Voluntary Arrangement (CVA), an insolvency procedure which would allow it to slash its rents and close stores.
Under the plans, Poundworld could close 100 of its 355 stores. It has not yet been revealed which stores could close.
Rising costs and a squeeze on consumer spending has forced several household names to pursue CVAs this year, including New Look, Byron, Prezzo and Carpetright.
Poundworld, which is owned by private equity firm TPG Capital, is expected to announce the terms of the CVA next month.
Landlords will then vote on whether to approve the proposal. All of the major CVAs proposed this year have been rubber-stamped by landlords.
TPG Capital also owns restaurant chain Prezzo, which recently secured the backing of creditors for a Company Voluntary Arrangement (CVA). The plan will allow the Italian-themed chain to exit unprofitable branches and secure rent reductions.
A total of 94 of Prezzo's 300 outlets will close, with around 500 jobs understood to be in the firing line, although many staff will be redeployed at other restaurants. The CVA proposal was backed by 88 per cent of the creditors.
Now competing with rivals such as Poundland and Poundstretcher, Poundworld was set up in the 1970s by Chris Edwards, who left the company last year.
Mr Edwards, who pocketed an estimated £75 million from the deal with TPG, has since been appointed to run Poundstretcher, which has also experienced difficult trading.
The company has opened a distribution centre in west Yorkshire which consolidated its logistics functions into a single 500,000 square foot facility.
Poundworld has also expanded its product range in a bid to keep pace with rivals.
While Poundland appeared to have enjoyed a robust festive period, with like-for-like sales up six per cent in the three weeks to Christmas Day, it too has faced challenges.