Poundworld to shut 117 stores

Poundworld will close 117 of their 355 stores as part of a company voluntary arrangement (CVA), it has been revealed.

According to The Grocer magazine, the discounter will close all 117 branches by 31st August, with the remaining 231 having rent reductions from their landlords.

In a document detailing the CVA, the company revealed it had been hammered since the loss of its credit insurance. Credit insurance is designed to protect suppliers in case a company falls into administration before they have been paid for their goods. However, It is often withdrawn, or rates are severely increased as soon as  retailers begin to show signs of financial struggle, and as a result many suppliers insist on full payment immediately.

In the case of Poundworld, this lead to a £6 million bill to its suppliers, but also stock availability issues of the peak Christmas period. Also mentioned as difficulties for the business was the Brexit-hit sterling, rising overheads including business rates and wages, as well as falling consumer spend.

It will now seek an additional £15 million in funding from Santander once the CVA is completed to support its turnaround effort. This is in addition to an emergency cash injection of £20 million from its owner TPG, which it said it had already “utilised”.

Source: Insight DIY Team

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