Poundland Sold to US Investment Firm for £1

Struggling discount retailer Poundland has been sold to the American investment company Gordon Brothers for a nominal fee of £1. The acquisition transfers all 818 stores and the jobs of 16,000 employees to the Boston-based firm. Gordon Brothers, known for rescuing distressed businesses, plans a restructuring aimed at ensuring the firm’s survival.

The deal includes an £80 million financing package provided by Gordon Brothers to aid the turnaround. Additional financial support will come from Poundland’s former owner, Pepco, which has pledged loans and an overdraft facility of £30 million. Pepco will also assist with inventory procurement and IT services during the transition period.

Poundland has faced significant challenges in recent years due to rising competition from supermarkets, big-box discounters like B&M and Home Bargains, and newer online rivals such as Temu and Shein. The retailer has moved away from its original business model of selling all items for £1, opting for a broader pricing range between 50p and £5. This shift has caused some customers to question its value proposition, particularly as the cost-of-living crisis has eased.

Under the terms of the deal, Barry Williams will remain in his role as managing director of Poundland. The restructuring plan is expected to involve the closure of around 100 stores and negotiations with landlords for rent reductions. Full details will be shared with the company’s creditors shortly, with a convening hearing and a subsequent court decision on the plans anticipated this summer.

Poundland was founded in 1990 and gained popularity during the financial downturns thanks to its attractive pricing model. However, over the years, it has struggled to maintain its foothold in an increasingly competitive retail landscape. The company was previously acquired by Warburg Pincus in 2010 and floated on the London Stock Exchange in 2014 at a valuation of £700 million. Pepco took over the business in 2016.

Mark Newton-Jones, head of Europe, the Middle East, and Africa at Gordon Brothers, expressed optimism about the turnaround prospects. He commented that Poundland is an essential retailer with a critical role on UK high streets, and the firm is committed to supporting its rejuvenation.

Gordon Brothers has an extensive track record of acquiring and restructuring troubled companies. It previously rescued Laura Ashley, the well-known fashion and homeware brand, and Polaroid, the camera pioneer. Both cases highlight the firm’s expertise in transforming distressed businesses into viable enterprises.