Poundworld crashes into administration, putting 5,100 jobs at risk
- Credit: Archant
Poundworld is set to become the latest retail casualty on the British high street as it calls in administrators, putting 5,100 jobs at risk.
The budget retailer is poised to appoint Deloitte to handle an administration after last-ditch rescue talks with R Capital broke down over the weekend.
Poundworld, which is owned by TPG Capital, has around 350 stores, including one on Tavern Street in Ipswich as well as stores in Chelmsford and Kings Lynn. Its possible collapse comes after both Toys R Us and Maplin fell into administration earlier this year.
It is understood that TPG and Poundworld’s management rejected offers to buy the business out of a pre-pack administration, and were hoping to sell it as a solvent business.
Other parties named as possible buyers were turnaround specialist Alteri Investors and Poundworld’s founder Chris Edwards.
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But a deal could not be struck.
Poundworld’s losses widened in 2016-17 to £17.1 million, from £5.4 million of losses the year before.
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Poundworld will continue to trade while a buyer for all or part of the business is sought, Deloitte said, adding that there are no redundancies or store closures at this time.
Clare Boardman, joint administrator at Deloitte, said: “The retail trading environment in the UK remains extremely challenging and Poundworld has been seeking to address this through a restructure of its business. Unfortunately, this has not been possible.
“We still believe a buyer can be found for the business or at least part of it and we are keeping staff appraised of developments as they happen. We thank all employees for their support at this difficult time.”
The retailer’s move would come just days after House of Fraser detailed its plans to shut 31 stores, affecting around 6,000 jobs.
House of Fraser is seeking landlord approval for the restructuring plan, which is a form of insolvency known as a Company Voluntary Agreement (CVA).
A raft of CVAs have been struck in recent months as retailers struggle amid surging costs, rising business rates, competition from online rivals and a slowdown in consumer spending.
Other retailers undertaking CVAs in a bid to keep trading include New Look, Mothercare and Carpetright.
Restaurant businesses have also been seeking to cut their costs with store closure programmes, with Carluccio’s, Byron and Prezzo all pushing through CVAs this year.