Update: Poundland saved from administration as judge approves restructuring plan

Poundland has avoided entering administration after a restructuring plan was approved by a judge at the High Court, days before the company was due to run out of money.

Barristers for the retailer had told a hearing earlier on Tuesday that it would be placed into administration by Friday and was set to run out of money by September 7 if the plan was not approved.

The scheme will see up to £60 million of new funding injected to keep the retailer afloat, among other terms.

Approving the restructure, Sir Alastair Norris said: “I am going to sanction the plan. I will give my reasons later.”

Poundland, founded in Burton upon Trent, Staffordshire, in 1990, had approximately 14,700 staff members and operated around 800 stores when it was sold by Pepco Group to Peach Bidco, a subsidiary of private equity firm Gordon Brothers, for £1 in June.

The company then announced plans to shut 68 stores, which would affect around 1,000 staff.

These are the stores set to be closed on Sunday August 31:

Blackburn, Lancashire
Cookstown, Northern Ireland
Erdington, West Midlands
Kimberley Nottingham, Nottinghamshire
Horsham, West Sussex
Hull Kingston retail park, East Yorkshire
Kettering, Northamptonshire
Omagh, Northern Ireland
Shepherd’s Bush, Greater London
Southport, Merseyside
Taunton, Somerset

This store will shut on September 14:

Irvine, Scotland

The following stores have already closed:

Ammanford, Wales
Birmingham Fort Shopping Park, West Midlands
Cardiff, Wales
Cramlington, Northumberland
Leicester, Leicestershire
Long Eaton, Nottinghamshire
Port Glasgow, Scotland
Seaham, County Durham
Shrewsbury, Shropshire
Tunbridge Wells, Kent
Bedford, Bedfordshire
Bidston Moss, Merseyside
Broxburn, Scotland
Craigavon, Northern Ireland
Dartmouth, Devon
East Dulwich, Greater London
Falmouth, Cornwall
Hull St Andrew retail park, East Yorkshire
Newtownabbey, Northern Ireland
Perth, Scotland
Poole, Dorset
Sunderland Pallion retail park, Tyne and Wear
Stafford, Staffordshire
Thornaby, North Yorkshire
Worcester, Worcestershire
Brigg, North Lincolnshire
Canterbury, Kent
Coventry Hertford Street, West Midlands
Newcastle Killingworth Centre, Tyne and Wear
Kings Heath, West Midlands
Peterborough Orton Gate shopping centre, Cambridgeshire
Peterlee, County Durham
Rainham, Kent
Salford, Greater Manchester
Sheldon, West Midlands
Wells, Somerset
Whitechapel, Greater London
Swiss Cottage, Greater London
Southampton West Quay, Hampshire
Chiswick, Greater London

Poundland said it will shut down 16 more stores but has not yet identified their locations.

It is understood that the closure dates for these are likely to be announced later in the year, when store workers will be informed.

Poundland also said it would close its frozen and digital distribution site at Darton, South Yorkshire, later this year and another warehouse at Springvale in Bilston, West Midlands, early next year, impacting a further 350 jobs.

The company also plans to stop online sales through its Poundland.co.uk website next month, and to retire its Perks app.

In written submissions for the hearing on Tuesday, Tom Smith KC, for Poundland Limited, said that its “profitability has sharply declined” in recent years.

He said: “The group was performing well prior to and during the Covid-19 pandemic.

“However, the business has struggled in the last two years in an increasingly challenging UK retail environment.

“Its response to these challenges was to broaden its offering, including by adding chilled and frozen products and introducing online sales.

“However, these changes increased operating costs, as did increases in the UK national living wage and employer national insurance contributions.”

In court, he said a “very significant amount of new money” would be injected into the company through the plan.

The scheme will also see Poundland given a £30 million overdraft facility, and dates for the retailer to pay back loans pushed back to 2028. Some of its rents will also be reduced under the plan, with Mr Smith telling the court that many of Poundland’s stores “are unprofitable at their current rents”, with the company paying “higher than market rates for a significant number” of its sites.

The restructure does not cover Poundland’s operations in the Republic of Ireland and the Isle of Man, where it trades as Dealz.

No-one has appeared in court to oppose the plan being approved.

Barry Williams, Poundland’s Managing Director, said following the hearing that the decision was “vitally important for Poundland, allowing us to stabilise the business, securing the future of hundreds of stores and thousands of jobs”.

He said: “Despite the opportunity this ruling provides, I’m extremely mindful of its consequences for our colleagues, especially those leaving us as we streamline our store estate, distribution network and support teams.

“We acknowledge the direct impact our plans have had on them and re-confirm our commitment to do all we can to support them.

“Nevertheless, our wider attention must now turn to getting Poundland back to growth.

“In the coming weeks we will focus on getting us back on track, revamping ranges, lowering prices and creating the simpler and more focused Poundland we know our customers are eager for us to deliver.”