Poundstretcher sold to Majestic Wine owner Fortress
Poundstretcher has been bought by the US investment firm Fortress, the owner of the Majestic Wine off-licence and Punch pubs group, for an undisclosed sum.
The deal for the UK discount retail chain, which includes its 322 shops, of which about 60 trade under the name Bargain Buys, is the latest twist in the history of one of Britain’s first discounters, which has undergone a number of rescue deals.
Fortress Investment Group, which was unsuccessful in its attempt to buy the UK supermarket group Morrisons in 2021, will install the former Morrisons commercial director Andy Atkinson as chief executive and the supermarket’s former chief operating officer and finance director Trevor Strain will join Poundstretcher’s board as nonexecutive director.
Ahsan Aijaz, the co-head of private equity at Fortress, said: “Poundstretcher is an exciting business in a critical part of the UK retail sector, and we recognise its importance to consumers across the country.
“We have long believed in the UK, and the consumer sector, as evidenced by our investments. We have a demonstrated history of investing in sponsored companies to drive growth, increase profitability and job creation – our plans for Poundstretcher are no different.”
Atkinson said Fortress was committed to being “long-term stewards” of Poundstretcher, which he said was “an exciting business with huge potential, in a large, growing and resilient sector”.
Grocery discounters such as Aldi and Lidl have fared well in the UK since the credit crunch, and during the cost of living crisis, when households have been trying to save money.
However, discount chains such as Poundstretcher and Poundland have faced increasing competition from fast
growing retailers such as B&M, Home Bargains and Savers as well as the big supermarkets.
On Thursday, Poundland revealed underlying sales were down 0.7% in the six months to the end of March, with sales of clothing and general merchandise hit by a switch to sourcing these goods via its parent group, Pepco. Poundworld, another rival, closed down in 2018.
The Poundstretcher deal marks the exit of Aziz Tayub, who first took an interest in the chain in 2007 with his brother via a stake in Brown & Jackson, a quoted company that owned the discount brand and was controlled by Pepkor, the group that now owns Poundland under the name Pepco. At the time Poundstretcher had only recently won a reprieve from being rebranded out of existence by the group in 2006.
Tayub took full control in 2009 and since then the chain has dipped in and out of profitability, with one effort at revival documented in 2018 Channel 4 series Saving Poundstretcher.
In 2020, Poundstretcher won approval from landlords for a rescue restructuring deal under which it was feared nearly half its then 270-plus stores could close unless landlords agreed to cut rents.
Some stores have shut but others opened, and last year Poundstretcher, which employs more than 4,000 people, filed pre-tax profits of £6.9m at Companies House, down from nearly £9m a year before, as sales slid almost 10% to £246m.
Tayub, who last year expressed a desire to float Poundstretcher on the stock exchange, said: “I am very pleased that the Fortress team will be providing the resources and investment needed to take Poundstretcher to its next stage of growth following my retirement.
“Fortress are well placed to work with the fantastic Poundstretcher team, who I’d like to thank for their hard work and dedication during the 18 years that we’ve grown the business together.”