Poundstretcher restructuring plan needed to avoid administration, court told

Sign over entrance to Poundstretcher store

placeholder image — Sign over entrance to Poundstretcher store

The discount retailer was bought by US investment firm Fortress in 2024 for an undisclosed sum.

Poundstretcher, which has stores across the West Midlands, will “likely have no choice” but to file for administration if a restructuring plan is not approved, a High Court hearing has been told.

The discount retailer, which has almost 300 stores nationwide including in Wolverhampton and Birmingham, was bought two years ago in 2024 by US investment firm Fortress, which also owns Majestic Wine, for an undisclosed sum.

Plans to ask landlords to slash rents across the Poundstretcher store estate were revealed in March to secure its long-term future of the business, although the company insisted it would not be shutting shops or cutting jobs.

Lawyers for Poundstretcher, which employs 3,000 staff across the UK, said at a hearing yesterday (May 6) that if a restructuring plan was not approved, it would have “insufficient funds” to meet its funding need of £2.8 million which is due in the week beginning June 28. This would increase to £9.7 million in the week beginning July 26.

Tom Smith KC, for Poundstretcher, said in written submissions: “In those circumstances, the directors of the company will likely have no choice but to file for administration.

“In the administration, the administrators are anticipated to continue trading for a limited period while available liquidity is used to support a sale of the stock…”

He said the restructuring plan would restore Poundstretcher to “financial stability” and to enable it to “implement the turnaround business plan”.

The hearing in London was a “convening hearing” where barristers ask for a judge’s permission to convene meetings of a company’s creditors to vote on the restructuring plan.

Mr Smith also told the court that since 2020 “the group’s performance has continued to deteriorate due to subdued customer confidence, rising operating costs and inflationary pressures”.

He said: “In light of its financial difficulties, the plan company has prepared the turnaround business plan, alongside Teneo, whom the plan company engaged as financial advisors, with the aim of avoiding administration and restoring the group to profitability.”

Mr Smith said this involved “shifting the product mix of the plan company to include more well-known household brands” and “optimising the plan company’s store portfolio, by opening stores on a selective basis in locations with higher footfall”.

In a ruling, Mr Justice Hildyard said he was “content” the matter should proceed to the meetings with the creditors on May 26. If they vote in favour of the scheme, the plan is set to return to the High Court to be approved by a judge at a “sanction hearing” scheduled for June 4.

A spokesperson for Poundstretcher said: “We welcome today’s court decision that allows our plan to proceed.

“Our plan is focused on strengthening Poundstretcher’s long-term position and creating a company that can grow in the years ahead.

“There are no planned store closures or redundancies and our stores continue to welcome customers throughout this process. Our priority remains serving customers across the UK.”

Poundstretcher has stores across the West Midlands in: