500 Scottish jobs under threat as Poundworld calls in administrators
Around 500 Scottish jobs are at risk after budget retailer Poundworld finally fell into the hands of administrators after rescue talks with a potential buyer failed.
The firm, which has about 40 stores north of the border, has appointed Deloitte as administrator, after flagging that it may have to do so last week.
Uk-wide, around 5,000 jobs are under threat at 355 branches nationwide, although the discounter has not yet announced any store closure plans.
Pound world, which is owned by TPG Capital, was in talks with R Capital over a possible acquisition, while other parties named as possible buyers were turnaround specialist Alteri Investors and Poundworld’s founder Chris Edwards. However, talks broke down over the weekend.
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.”
She said the business was hit by falling footfall, alongside rising costs and weak consumer confidence. However, retail experts pointed also to the overexpansion of the discount retail sector.
Leigh Sparks, professor of retail studies at Stirling University, said: “You have to look at the growth of the sector. Everyone piled into the discount sector because it seemed to be a good place to be. But it is not easy. You need to keep very good cost control, it is a tough business.”
He added: “You’ve got the overexpansion, plus the rising costs, which in this case would have been a factor. If you are importing a lot of products as Poundworld probably was, then you have to think about what has happened with the pound.”
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. Poundworld’s losses widened in 2016-17 to £17.1 million, from £5.4m of losses the year before.
A TPG spokesman said: “This was a difficult decision for every party involved. We invested in Poundworld because of our belief in how the company serves its customers and the strength of its employees.
“Despite investing resources to strengthen the business, the decline in UK retail and changing consumer behaviour affected Poundworld significantly.”