Two specialist investors among bidders for struggling Poundland

Several potential buyers are preparing to submit takeover bids for Poundland, the Walsall-based discount retailer.

The company’s owner, Pepco Group, is looking to swiftly exit the British high street amid mounting losses and ongoing struggles to turn the business around.

Sky News has reported that among the bidders are Endless, a turnaround investor, and Hilco Capital, the new owner of Lakeland.

Alteri Investors, the owner of Bensons for Beds, is also participating in the auction.

Modella Capital, which recently acquired WH Smith’s high street division and is involved in rescue deals with other brands, may also submit a proposal.

The 825-store chain has faced increasing losses and difficulties turning around its business, and was put up for sale by its Warsaw-listed owner, Pepco Group.

Pepco, which also owns the Pepco and Dealz brands, plans to refocus on its Pepco brand as its primary business and confirmed in March that it would explore selling the company, with Teneo advising on the auction process.

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.

Rising operating costs and a challenging consumer environment have compounded its difficulties.

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.