Discount retailer Poundworld has announced that after failed rescue talks the company is entering into administration. Over 5,000 jobs are now at risk across the 335 stores. More recent announcements have confirmed that 98 job losses will be made at the Head Office in Normanton, West Yorkshire.
The market for discount retailers has become increasingly challenging for a number of reasons:
Appointed administrators Deloitte commented that Poundworld had been addressing these challenges through a formal restructure of the business, however this had not been possible. The business has made financial losses for the last two years, up to £17.1m for the financial year 2016/2017.
A potential buyer, R Capital, had been in discussions with Poundworld but these talks recently collapsed.
Founder of Poundworld, Chris Edwards, has commented strongly that the company’s poor performance is primarily a result of the current management team ‘not adjusting’ to rising cost pressures.
In a recent BBC Radio 5 Live interview he cited that other discount retailers weren’t suffering: “For every store that goes down others are still thriving. It’s about management style, that is what makes the business work.”
Mr Edwards sold Poundworld to current owners TPG Capital for £150m in 2015. He went on to help the owners of rival store Poundstretcher revive the business in 2016.
Mr Edwards further commented in his radio interview that he had been negotiating to buy Poundworld stores for the last 6 weeks, but would need an additional investor in order to renegotiate the company debts and save the business.
The Poundworld stores remain open and trading with no redundancies at this time, confirmed administrators Deloitte.
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