Poundstretcher Plots Major Store Closures in Restructuring Move
A major UK high street chain is reportedly plotting a significant wave of store closures as part of a substantial restructuring effort following its recent takeover. Poundstretcher, the well-known budget retailer, is considering closing a number of its stores across the country.
Restructuring Plan Details and Creditor Approval
The discount retailer could face extensive closures under a restructuring plan that, if approved, may be launched within days. Poundstretcher, which operates branches in Birmingham and other locations, is collaborating with advisors to develop this court-sanctioned plan, which requires creditor approval to proceed.
Fortress Investment Group acquired the discount store chain two years ago, with nearly 320 stores currently thought to be in operation. It remains unclear exactly how many stores would be shuttered in any reduction, but the move signals a major shift for the retailer.
Historical Context and Previous CVA Success
In 2020, during the Covid-19 crisis, Poundstretcher successfully implemented a major restructuring plan involving rent cuts that was approved by landlords. More than 90% of creditors approved the move, surpassing the 75% threshold needed, which bought an extra six weeks for 253 stores whose futures were at risk.
The proposals for that Company Voluntary Arrangement (CVA) deal stated that rents would be paid on these sites for an initial six-week period. However, it noted that the future of these stores would depend on the commercial merits of each location in collaboration with landlords, casting uncertainty over their long-term viability.
Financial Adjustments and Expert Commentary
The 2020 deal also secured rent reductions of between 30% and 40% for 84 of its 450 stores, while approximately 94 stores continued to pay current rents. Will Wright, restructuring partner at KPMG and joint supervisor of the CVA, commented at the time that the approval provided a stable platform for the company to operate across a more focused store portfolio.
Poundstretcher opted to launch the CVA after the impact of the Covid-19 pandemic and lockdowns on store footfall exacerbated existing problems following a decline in profitability in recent years. This historical context underscores the ongoing challenges facing the retailer as it navigates current restructuring efforts.
