Written ByRobert Moore
Marketing Manager
Rob has over a decade of experience in web and general marketing. He has extensive knowledge of the Insolvency sector and has helped many worried directors with their questions.
Rob is now working with the Board at KSA Group Ltd to develop strategic marketing programmes to support the business plan and drive more company rescues.
Sky News has reported that Polish-based Pepco Group, which has controlled Poundland since 2016, has recruited AlixPartners, the retail experts, to handle a sales dip that has prompted worries about company’s future. The company operates over 850 sites and employs 18,000 staff
Like for like sales were down 7.3% over the crucial Christmas period.
AlixPartners is understood to have been formally engaged last week, with options including a company voluntary arrangement (CVA) or restructuring plan said to have been discussed by a range of advisers on a highly preliminary basis.
In its trading statement, Pepco said that Poundland had suffered “a more difficult sales environment and consumer backdrop in the UK, alongside margin pressure and an increasingly higher operating cost environment”.
“We expect that the toughest comparative quarter for Poundland is now behind us – the same quarter last year represented a period prior to the changes made within our clothing and GM [general merchandise] ranges – and therefore, we expect the negative sales performance for Poundland to moderate as we move through the year.”
The company is said to be looking at multiple ways to improve its cash position by selling more goods over £1 to expand its range of products.
The mere fact that it has been leaked that a company voluntary arrangement (CVA) has been discussed is pertinent. The reason is because talk of a CVA can be a very useful tool to put pressure on landlords to consider rent reductions. Under a CVA the retailer can exit leases, at no cost, leaving landlords out of pocket. To understand a bit more about this please read our CVA and retailers article.
Of course it is also likely that the company will come under extra pressure from the increases in minimum wage, NI increases and the loss of 75% business rates relief.
Since the cost of living crisis there has been strong competition from other discounters like B&M and Poundstretcher. Poundstretcher themselves used a CVA to reduce costs. They exited in 2022 paying just 12p in the £1 to its unsecured creditors
If such a big retailer were to fail this would send shockwaves through the sector and would be a political headache for the Labour Government.
What is a CVA? | Company Voluntary Arrangements Explained
What is a CVA? | Company Voluntary Arrangements Explained
Advice If You Are A Creditor Of A Company Proposing A CVA
Advice If You Are A Creditor Of A Company Proposing A CVA
CVA Case Law Created By A KSA Client – Thomas Vs Ken Thomas Ltd
CVA Case Law Created By A KSA Client – Thomas Vs Ken Thomas Ltd