Future of 250 Poundstretcher stores hangs in balance

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Doubts have been raised over the future of 250 Poundstretcher stores under a drastic restructuring strategy.

The discount chain, which is headquartered in Leicestershire, has started talks with its landlords and creditors in a bid to secure its future.

It has offered to continue paying the rents for 253 stores for the next six weeks – then the future of each will depend on how well it is trading and the terms that can be agreed with its landlord.

The proposal is part of a Company Voluntary Arrangement (CVA) that the business has launched as part of a wider turnaround plan to restructure its UK store portfolio.

The plan also includes “stemming losses from underperforming outlets, realigning head office costs and paving the way for investment in the business’ core estate and product offering”.

The business, which was bought by the Leicestershire Tayub family’s Crown Crest wholesale group in 2009, was planning a significant restructuring to achieve sustainable profits bring in cash even prior to the lockdown.

Recent trading figures for Crown Crest showed turnover for its last financial year was £442 million – up from £397 million a year earlier.

However operating losses grew from £4.9 million to £9.4 million, due to pressures on the wholesale side of the business as well as Poundstretcher sales falling.

Will Wright and David Costley-Wood from business consultancy KPMG’s restructuring practice are the proposed nominees of the CVA.

Mr Wright said: “One of the UK’s best-known discount retailers, 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.”

The company has more than 450 UK stores and a national distribution centre next to its head office in Kirby Muxloe, Leicestershire.

It directly employs more than 5,500 people and the CVA proposal divides the store portfolio into three categories:

– 94 stores, where the leases will be retained at current rents;

– 84 stores where it has been agreed that rents will be reduced by 30 and 40 per cent, for a period of three years;

– And the 253 stores which have question marks over their futures

The company also occupies a 23 stores under leases with a connected company, Poundstretcher Properties Limited.

The directors’ aim to place that company into administration prior to the decision date of the CVA.

KPMG said Poundstretcher needs to secure at least 75 per cent creditor approval – by value – for the CVA for it to proceed.

Detailed proposal documents are being made available to creditors via a dedicated website and the creditors will have until July 2 to decide.

Consultations have already taken place with key creditors and further talks are planned.


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