Poundworld Woes that Put 5,300 Jobs at Risk
Poundworld, which was founded in 2004 is set to announce its intention of appointing administrators. The move will enable the company about ten days or two weeks to proceed negotiations with the potential buyers’ without the creditors of the company making claim on the business. The move, therefore, allows the company’s staff and suppliers to continue receiving payment.
It is alleged that an Investment Company – R Capital is in negotiations to purchase Poundworld which currently has 5,300 workers and 355 stores. Poundworld also trades under the brand name – Bargain Buys and serves at least two million customers every week. The owner of the brand name is a US Private Equity Firm known as TPG.
Earlier in the week, there was a collapse of the talks with a potential buyer – Alteri Investors whose website indicates that the firm focusses on “challenging retail situations”. Additionally, at least 100 of Poundworld Stores were on the brink of closure and only remained open because of the ongoing takeover talks. If the company fails to find a purchaser, Deloitte stands to be appointed as one of its administrators. Some sources have played down the probability of Chris Edwards, a former owner of the company being able to repurchase the company outright.
Interestingly, Poundworld has been making losses and thus losing money for the past two years. Figures indicate that there were£17.1m losses in the 2016-17 financial year which was an increase in the previous year’s losses which stood at £5.4m. Just like other retailers, Poundworld woes emanate from the decreased consumer confidence, increased overheads as well as a weak pound and a shift towards online shopping.
The question that comes up for most consumers is, what is R Capital? Well, the company was established in 2004 and has participated in over fifty investments in the United Kingdom and across Europe. The company purchased Little Chef and made an attempt at turning the business around with the assistance of ChefHeston Blumenthal.
The company also purchased Tie Rack in 2013 but later sold in 2015 to Samsonite for £15.7m. The current portfolio of R Capital includes Cluttons- a property Company, the Harley Medical Group and the Odyssey Health Clubs.
On Thursday, an announcement was made by House of Fraser concerning its plans to close down 31 of its 59 stores which include the flagship outlet located on London’s Oxford Street. Other retailers that have hit headlines this year because of trading woes include the Maplins, Mothercare, Toys ‘R’ Us, Carpetright in addition to a string of restaurant chains.