Pep&Co is considering closing up to a sixth of its standalone store estate in favour of shop-in-shop formats at nearby Poundland outlets.

The fledgling fashion retailer is closing two stores in its 60-strong standalone estate this month in Cymbran, Wales and Chatham, Kent and replacing them with concessions in local Poundland stores.

No job losses will be incurred by the moves and staff working at the two branches will transition to being Poundland employees.

A spokesman said eight further outlets in the retailer’s standalone estate had also been identified for “potential relocations”, although whether further store replacements will go ahead is not yet known.

It is understood that the relocations are not part of a wider strategy to significantly reduce Pep&Co’s standalone bricks-and-mortar estate, although the retailer is planning to close three of its original tranche of 50 standalone shops over the next few months due to sluggish sales.

The spokesman for Pep&Co said that the 10 stores which had been singled out for potential relocations had not been selected based on sales performance, but where there would be a “significant benefit” to combining the two stores and “an opportunity to build on existing sales with the footfall of a Poundland”.

The value fashion retailer is opening 100 store-in-stores in Poundland outlets this year.