Value chain 99p Stores has tumbled into administration less than two years after it was bought by Poundland, Retail Week can reveal.
The administration will impact around 60 shops, which remained on 99p Stores leases following the acquisition but have already closed.
Steinhoff-owned Poundland snapped up its rival in September 2015 in a deal worth £50m.
It began the process of converting around 250 99p Stores and transferring the properties to Poundland leases.
But sources close to the situation told Retail Week that around 60 of 99p Stores “unprofitable” shops remained on old leases under the subsidiary company.
Poundland had circulated a list of stores it wanted to offload to the market in a bid to limit store cannibalisation and duplication following the merger.
But after failing to shed the shops from its portfolio, the rump 99p Stores has now entered administration.
Alix Partners has been appointed to handle the process.
‘Very limited’ impact on jobs
A Poundland spokesman said there would be a “very limited” impact on jobs, because it has “stores located near to those we’re closing.”
He said: “It’s no secret that the previous management of Poundland had difficulties digesting its 99p Stores acquisition.
“However, we’ve largely completed the store closure programme that addressed the remaining overlaps from that 99p acquisition.”
The spokesman added the administration would have “no impact on Poundland itself.”
In March last year, Poundland appointed former B&Q boss Kevin O’Byrne as chief executive, to replace Jim McCarthy.
But following Steinhoff’s acquisition of the business just months later, O’Byrne departed to join Sainsbury’s as its new finance boss, despite reportedly being offered a share package worth £2.7m to stay.
Former Asda boss Andy Bond, who is currently in charge of Steinhoff’s Pepkor Europe business, was named Poundland’s executive chairman.
It is the latest retailer to hit difficulties as fierce competition on the high street takes it toll on a number of businesses.
Value footwear chain Brantano fell into administration last week, although its sister retailer Jones Bootmaker was saved by Endless in a pre-pack administration deal.
Fashion operator Store Twenty One is understood to be in talks with its lender over its quarterly rent payments, which could push the retailer into administration if they go unpaid.