Poundstretcher could close 250 UK stores

Poundstretcher could close over half its stores – more than 250 outlets affecting more than 2,000 jobs – as part of a planned rescue restructure.

The cut-price retailer, which also owns the Bargain Buys chain, is asking landlords and other creditors to back a creditors voluntary arrangement (CVA), an insolvency process under which it wants to slash rents on 84 stores by more than 30%.

It said 253 outlets could potentially close if significant rent cuts or holidays could not be agreed. A further 23 stores could also shut as Poundstretcher plans to put into administration a subsidiary group which owns the properties.

Will Wright of advisory firm KPMG, which has been appointed to handle the CVA, said: “Poundstretcher has suffered from significant impacts to profitability on several fronts over a sustained period, which were then further exacerbated by the impact of Covid-19 on footfall.

“With the directors of the business having explored a number of options, this CVA seeks to safeguard the long-term future of the business, across a smaller, more sustainable store estate.”

Poundstretcher’s store closure plans come amid a wave of restructures as retailers that were already suffering in a tough trading environment struggle to cope with the high street lockdown to prevent the spread of coronavirus.

Since March, Debenhams, Monsoon Accessorize, Cath Kidston, Laura Ashley, the UK arm of Victoria’s Secret, Oasis and Warehouse have all called in administrators, leading to store closures. This week, Travis Perkins announced the closure of 165 stores in the UK.

Even online players have been affected. Specialist fashion website Long Tall Sally wrote to customers on Tuesday saying it would be winding down in August with the loss of 85 jobs. “Please know we explored every possible avenue to continue trading but the financial impact of the pandemic means the business is no longer sustainable,” said Alison Doherty, the brand’s chief operating officer, in an email.

Poundstretcher creditors have until 2 July to vote on the CVA, which requires approval from those representing at least 75% of the value of the company’s debts in order to go ahead.

Founded in 1981, Poundstretcher was one of the UK’s first discounters. It has 450 stores and employs more than 5,500 people, but faces heavy competition from the likes of B&M, Poundland and Home Bargains as well as the major supermarkets. Rival Poundworld collapsed two years ago.

Last year sales rose 12% to £434m but the group sank to a loss of £227,000 from a profit of £2m a year before, according to accounts filed at Companies House.

The retail group was once part of listed company Brown & Jackson, which was controlled by South African retail tycoon Christo Wiese. It was bought out by entrepreneurs Rashid and Aziz Tayub’s Crown Crest group in 2009.