Wed, 17 Jun 2020 | ADMINISTRATION
Bargain retailer Poundstretcher could close over 250 outlets, more than half of its stores, as part of a survival plan. The company is asking landlords and other creditors to approve a creditors voluntary arrangement (CVA), through which it is hoping to cuts rents at 84 stores by over 30 per cent for three years.
The CVA is being overseen by KPMG and, if approved, would see 253 stores pay full rent for an initial six weeks, “after which” KPMG said, “continued trading will depend on the commercial merits of each store with the relevant landlords' collaboration”. If rent cuts cannot be agreed, the 253 outlets could close. A further 23 could close as Poundstretcher seeks to put the subsidiary that operates them into administration.
KPMG’s Will Wright outlined the retailer’s struggles: “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 has 450 UK stores, employing over 5,500 staff. The potential closures could impact more than 2,000 of these jobs. In its 2019 accounts, the company reported sales of £434 million, an increase of 12 per cent from 2018. However, it registered a loss of £227,000, down from a £2 million profit the year prior. Its creditors have until July 2 to vote on the CVA, which would require approval from creditors representing at least 75 per cent of Poundstretcher’s debts.
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