Poundland owner weighs up sale of discount retailer

Poundland, the Walsall-based discount chain, may be up for sale as its parent company, Pepco Group, explores options for the business.

Pepco has confirmed it is “evaluating all strategic options” for its underperforming 825-store Poundland chain in Britain, including the possibility of a sale.

Pepco, which also owns the Pepco and Dealz brands, plans to refocus on its Pepco brand as its primary business.

Despite generating over £1.67 bn (€2bn) in revenue last year, Poundland is facing challenges in the increasingly tough UK retail market and has struggled with higher employer taxes following the government’s October budget.

The group reported a £649 (€775m) impairment charge for Poundland, contributing to a £548m (€662m) net loss for the group.

Former Poundland managing director Barry Williams, who took over as managing director of Pepco in September 2023, will return to his previous role at Poundland ahead of any potential sale, while CEO Stephan Borchert will continue to lead Pepco.

Borchet said: “We are taking clear strategic action to focus on the Pepco brand as our single future format, to move away from FMCG and create a simpler business focused on higher margin clothing and general merchandise. Pepco will continue to be the engine of the group’s earnings potential, and its strong customer offer and price leadership give it a compelling ‘white space’ opportunity to drive further profitable growth in its Central and Eastern European heartland, as well as select markets in Western Europe.”

While Pepco expects profitable growth in 2024/25, Poundland’s forecasted EBITDA for the UK chain is set to drop significantly, ranging from £43m to £60m (€50m to €70m), down from £118m (€138m) last year.

At the end of 2024, Pepco announced it was “taking swift action to get Poundland’s performance back on track” after a sharp drop in sales. 

Borchert continued: “The board and I are actively exploring separation options for Poundland, including a potential sale, from the group, with consideration also given to the separation of the well-performing Dealz Poland over the medium term.

“Barry Williams did a great job as managing director of Pepco, returning it to like-for-like sales growth, and I am confident he will play a pivotal role in getting Poundland back on track, given his previous success there.”