Poundland’s parent company Pepkor Europe has been thrown a lifeline with a new two-year independent loan which will replace planned Steinhoff investment “in full”.
Pepkor Europe will use its new banking facility to support the day-to-day operations and expansion plans of Poundland as well as the value retailer’s European arm Dealz and shop-in-shop clothing partner Pep&Co.
The South African retail group’s European division will also use a proportion of its new £180m cash injection to support Steinhoff stablemates Harveys and Bensons for Beds. As revealed by Retail Week, both had their credit cover cut in December.
Pepkor Europe said its new loan facility has been secured from “a financial institution” and that it is no longer “dependent on working capital support” from its beleaguered owner, Steinhoff.
The retail conglomerate has seen 90% of its market value wiped out after it uncovered “irregularities” in its accounts.
Pepkor Europe chief executive Andy Bond said: “Our European Pepkor businesses – Poundland, Dealz and Pep&Co in Western Europe and Pepco in Eastern Europe – are firing on all cylinders, adding customers and growing market share.
“They are all independent, profitable, delivering positive cash flows.
“Because of this strength, despite the ongoing issues faced by our parent company, we have been able to work quickly over Christmas to activate new sources of funding that will enable us to reassure suppliers, implement our investment plans and secure the future of these successful businesses.”
Harveys and Bensons for Beds chief executive Stuart Machin said: “Harveys, Bensons for Beds and our manufacturing businesses have always been run independently and for British customers.
“This new finance facility will allow us to continue to build on the progress we’ve made in the last few months.”
‘A vote of confidence’
In an internal memo sent to staff and seen by Retail Week, Machin added: “It’s a vote of significant confidence in the team that we’ve been able to work rapidly over the holiday period to put in place a new financial framework that will allow us to continue to serve our customers without skipping a beat.”
Machin said Bensons’ and Harveys’ positions were “strong” and pointed to financial highlights, including a 31% year-on-year jump in online sales during peak since both brands’ websites were refreshed.
The retailer has also launched new concept stores in Wednesbury and Farnborough.
Machin, who took the reins at the two businesses last summer, said the stores have “got off to a great start” in their first full weeks of trading.
Poundland said it had delivered a “strong turnaround” in the most recent financial year, buoyed by an average 11% rise in like-for-like sales in its stores that feature a Pep&Co shop-in-shop.