Uncertainty for Poundstretcher staff as discounter launches CVA
POUNDSTRETCHER has warned that up to 253 of its UK stores are at risk of closure if landlords do not agree to rent cuts or holidays.
The discount retailer, which has 27 stores in the north, including two Bargain Buys outlets, has launched a company voluntary arrangement (CVA).
The insolvency process effectively allows companies to continue trading while seeking rent cuts and enacting store closures.
The company, which employs a total of 5,500 people in 450 shops, has indicated it wants to slash rents on 84 stores by more than 30 per cent.
It’s unclear how many of the Northern Ireland stores will be effected, but the company warned that 253 outlets could potentially close if significant savings, including rent cuts, cannot be agreed.
Poundstretcher has faced increasing increased competition from the likes of B&M and Home Bargains. Rival Poundworld collapsed in 2018.
Will Wright from advisory group KPMG, which has been appointed to handle the CVA process, said: “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.”
Poundstretcher’s creditors have until July 2 to vote on the CVA, which needs backing from those representing 75 per cent of the group’s debts.