Poundstretcher stores at risk of closure

Poundstretcher is seeking to restructure its 450-strong store portfolio, to stem losses from underperforming outlets, reduce head office costs, and to invest in its core estate and product offering.

Under its Company Voluntary Arrangement (CVA) proposals, the leases on 94 would be retained at current rents, 84 stores would have rents reduced by 30-40% for three years, and 253 stores would have rents paid in full for an initial period of six weeks after which continued trading would depend on “the commercial merits of each store with the relevant landlords’ collaboration”.

In addition, 23 outlets could also shut as the retailer plans to put a subsidiary group that owns the properties into administration.

Will Wright, from KPMG’s restructuring practice, 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 retailer needs to secure at least 75% creditor approval by value for the CVA for it to proceed.