Poundworld collapse risks hundreds of Scottish jobs
POUNDWORLD has collapsed into administration, placing hundreds of Scottish jobs at risk.
The budget retailer called in administrators yesterday after last-ditch rescue talks broke down over the weekend.
The store, which employs 516 workers in Scotland across 38 stores, is the latest casualty on the high street following a string of retail collapses in recent months due to rising costs and low consumer spending.
Poundworld, owned by TPG Capital, has appointed Deloitte to handle its administration after potential buyer R Capital withdrew from talks.
Deloitte said it would continue to try to find a buyer for the business, and confirmed there would be no redundancies or store closures at this time.
The retailer operates a total of 335 store across the UK and employs more than 5,000 workers.
Clare Boardman, joint administrator at Deloitte, said: “The retail trading environment in the UK remains extremely challenging and Poundworld has been seeking to address this through a restructure of its business.
“Unfortunately, this has not been possible.
“We still believe a buyer can be found for the business, or at least part of it, and we are keeping staff appraised of developments as they happen. We thank all employees for their support at this difficult time.”
She added that the business had been hit by falling footfall, alongside rising costs and weak consumer confidence.
A spokesman for TPG said putting the business into administration was a “difficult decision”.
“We invested in Poundworld because of our belief in how the company serves its customers and the strength of its employees,” he added.
“Despite investing resources to strengthen the business, the decline in UK retail and challenging behaviour affected Poundworld significantly.”
It is understood that TPG and Poundworld’s management rejected offers to buy the business out of a pre-pack administration, and were hoping to sell it as a solvent business.
Other parties named as possible buyers were turnaround specialist Alteri Investors and Poundworld’s founder Chris Edwards. However, a deal could not be struck. Poundworld’s losses widened in 2016-17 to £17.1 million, from £5.4m of losses the year before.
Its collapse comes after both Toys R Us and Maplin also fell into administration earlier this year.
The high street has also been rocked by a succession of other retailers announcing plans to shut stores amid very tough trading conditions.
Just last week, House of Fraser detailed its plans to shut 31 shops, including their large Princes Street store in Edinburgh, affecting around 6,000 jobs.
The department store is seeking landlord approval for the restructuring plan, which is a form of insolvency known as a Company Voluntary Agreement (CVA).
A raft of CVAS have been struck in recent months as retailers struggle, with competition from online rivals also causing problems for high street stores.
Other retailers undertaking CVAS in a bid to keep trading include New Look, Mothercare and Carpetright.
Businesses within the restaurant trade have also been seeking to cut their costs through store closure programmes, with Carluccio’s, Byron and Prezzo all pushing through CVAS this year.