Sat, 17 May 2025 | BUSINESS SALE
Discount retailer Poundland is expected to be sold for a nominal fee of just £1, with US-based turnaround investor Gordon Brothers emerging as the leading bidder for the struggling high street chain.
The budget retailer, which operates 825 stores across the UK and Ireland and employs approximately 18,000 people, is set to change hands as Warsaw-listed owner Pepco Group looks to offload the business following a period of declining performance. Formal bids are expected to be submitted by Tuesday, May 20, with a deal potentially finalised in the coming weeks.
Despite generating annual sales of approximately £1.6 billion, Poundland has struggled with deteriorating trading conditions in recent months. Like-for-like sales fell by 7.3% in the three months to December 31, 2024, with the retailer particularly hit by underperformance in clothing and general merchandise following a transition to Pepco-sourced products.
Gordon Brothers, the former owner of Laura Ashley, is reportedly in pole position to acquire the discount chain, although sources close to the matter caution that the bidding process has not yet concluded. The investment firm specialises in retail turnarounds, having previously acquired Polaroid out of bankruptcy in 2009.
Several other turnaround investors remain in contention, including Modella Capital (which recently acquired WH Smith's high street division), Hilco Capital (owner of Lakeland), Alteri Investors (owner of Bensons for Beds), and Endless. These firms have all been shortlisted and advanced to the second stage of the auction process.
Industry sources indicate that any successful bidder would likely implement significant restructuring measures. The Telegraph reports that bidders have identified up to 200 loss-making stores that could face closure shortly after acquisition. This represents approximately a quarter of Poundland's total estate and would put thousands of high street jobs at risk.
Pepco Group announced in March 2025 that it was "actively exploring" separation options for Poundland, including a potential sale, as part of a strategic shift to focus on its higher-margin Pepco brand. The group attributed Poundland's difficulties to "a more difficult sales environment and consumer backdrop in the UK, alongside margin pressure and an increasingly higher operating cost environment".
The discount retailer has also been impacted by recent policy changes, with Pepco specifically citing the UK government's tax increases announced in the October 2024 Budget as adding "further pressure to Poundland's cost base". Chancellor Rachel Reeves' increase to employer National Insurance contributions, which took effect in April 2025, has disproportionately affected labour-intensive retail businesses.
In an effort to improve performance, Poundland increased its range of £1 or lower-priced items from 1,500 to nearly 2,400 in January 2025, returning to its traditional pricing strategy after years of expanding into higher price points.
The sale represents a significant shift for the retailer, which was acquired by Steinhoff International for £610 million in 2016 before being spun off into Pepco Group. Financial services firm Teneo is advising Pepco on the sale process.
With bids due imminently, the future of one of Britain's most recognisable discount retailers hangs in the balance, with significant implications for the UK high street and thousands of retail workers.
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