THE future of Poundland has been left uncertain as its owner explores a “potential sale”.
Polish company Pepco said it was looking at “all strategic options” to separate Poundland from its brand.
The group said it could make the major move to focus on its more profitable businesses in Europe after previously stating it may be forced to close Poundland’s 800 UK stores.
It comes as Pepco said the upcoming hike to employer National Insurance Contributions (NICs) and national minimum wage would significantly add to its costs.
From April, employer NICs will rise from 13.8% to 15% and the threshold at which they’re paid will fall to £5,000 from £9,100.
The group also issued a warning over its annual earnings due to challenging trading conditions.
Pepco said: “Poundland is a strong brand that serves millions of customers every week and had around 2 billion euros (£1.67 billion) in annual turnover in financial year 2024, but it is also operating in an increasingly challenging UK retail landscape that is only intensifying.
“From April 2025, the UK Government’s additional tax changes announced in the budget will also add further pressure to Poundland’s cost base.
“Therefore, the board is actively evaluating all strategic options to separate Poundland from Group during financial year 2025, including a potential sale.”
It’s important to note though that just because Pepco is mooting the idea of selling Poundland, that doesn’t mean it will definitely happen.
In the trading update to investors today, Pepco also said it would look at options to offload its Dealz business in Poland.
The group also said it was reviewing its Pepco chain in Germany.
[bc_video account_id=”5067014667001″ application_id=”” aspect_ratio=”16:9″ autoplay=”” caption=”Five ways to save money at Poundland” embed=”in-page” experience_id=”” height=”100%” language_detection=”” max_height=”360px” max_width=”640px” min_width=”0px” mute=”” padding_top=”56%” picture_in_picture=”” player_id=”default” playlist_id=”” playsinline=”” sizing=”responsive” video_id=”6351158832112″ video_ids=”” width=”640px”]Pepco said former Poundland managing director Barry Williams, who took over as managing director of Pepco in September 2023, will also return to his former role at Poundland ahead of any possible sale.
Stephan Borchert, chief executive of Pepco Group, said: “The board and I are actively exploring separation options for Poundland, including a potential sale, from the group, with consideration also given to the separation of the well-performing Dealz Poland over the medium term.
“Barry Williams did a great job as managing director of Pepco, returning it to like-for-like sales growth, and I am confident he will play a pivotal role in getting Poundland back on track, given his previous success there.”
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The latest announcement from Pepco comes after the group reportedly brought in advisors to look at addressing issues at Poundland following a sales slump.
Consultants AlixPartners were reportedly drafted in earlier this year to look at options for a major restructuring of the retail chain.
This was said to include the potential for “significant store closures“, as well as a sale of the business.
Another option reportedly being considered was a company voluntary agreement (CVA).
A CVA allows firms to look at ways to save the business, such as reducing rent rates with landlords or closing stores.
[boxout headline=”RETAIL PAIN IN 2025″ intro=”The British Retail Consortium has predicted that the Treasury’s hike to employer NICs will cost the retail sector £2.3billion.”]Research by the British Chambers of Commerce shows that more than half of companies plan to raise prices by early April.
A survey of more than 4,800 firms found that 55% expect prices to increase in the next three months, up from 39% in a similar poll conducted in the latter half of 2024.
Three-quarters of companies cited the cost of employing people as their primary financial pressure.
The Centre for Retail Research (CRR) has also warned that around 17,350 retail sites are expected to shut down this year.
It comes on the back of a tough 2024 when 13,000 shops closed their doors for good, already a 28% increase on the previous year.
Professor Joshua Bamfield, director of the CRR said: “The results for 2024 show that although the outcomes for store closures overall were not as poor as in either 2020 or 2022, they are still disconcerting, with worse set to come in 2025.”
Professor Bamfield has also warned of a bleak outlook for 2025, predicting that as many as 202,000 jobs could be lost in the sector.
“By increasing both the costs of running stores and the costs on each consumer’s household it is highly likely that we will see retail job losses eclipse the height of the pandemic in 2020.
Poundland’s struggles come following a challenging backdrop for the retail sector.
Rising costs coupled with shoppers tightening their purse strings have placed pressure on businesses and damaged sales.
In January, Poundland said it would increase the number of items which cost £1 or less from around 1,500 to almost 2,400 to appeal to cash strapped shoppers.
The firm has also been battling a rise in theft, with hundreds of employees now wearing bodycams to help catch criminals.
It comes after Pepco said it was facing a higher cost outlook in the UK following the Government’s Budget last autumn.
Profits at the firm tumbled by £641million in the year to September, with bosses again blaming slow sales amid a poor outlook due to measures set out by Chancellor Rachel Reeves.
A spokesperson also said the huge loss was “due to a non-cash impairment at Poundland that relates to the acquisition of the UK chain in 2016”.
The retailer only opened two stores over the last quarter and closed a total of 13.
Poundland is not the only bargain chain languishing on the high street either.
The future of The Original Factory Shop was left uncertain after administrators Teneo were brought in to explore all options for the retailer, including an attempt to sell the chain.
And MaxiDeals, a bargain chain that rivalled Poundstretcher, announced it had gone into liquidation last month.
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