Poundland has sent a statement to its employees insisting that despite its credit cover being downgraded it expects “no impact on the business in terms of supply”.
According to an internal document sent to the value retailer’s staff and seen by Retail Week, Poundland has continued to trade strongly despite its parent company Steinhoff’s accounting scandal and subsequent share price slump.
The value retailer said in the internal memo sent by Pepkor Europe chief operating officer Sean Cardinaal and Poundland managing director Barry Williams that “in just 12 months we’ve established a robust, profitable business generating cash and [are] trading more strongly than we have in many years”.
The retailer, which was bought by Steinhoff last year for £610m, said last week marked its 34th consecutive week of like-for-like sales growth, adding that “not even the appalling weather at the beginning of the week could put a stop to our underlying momentum”.
“We’re confident once insurers fully understand our position – trading strongly and independent of Steinhoff – they will be able to offer additional reassurances to our suppliers”
Poundland internal memo
Poundland has dismissed last week’s reports about its downgraded credit cover and suppliers subsequently ceasing to provide stock as “speculation”.
“Our strong performance is why we believe any action by credit insurers to make our life difficult for our suppliers is irrational,” the memo said.
“We certainly can understand why some of them are uneasy – we were as surprised as anyone by the events at Steinhoff – however, over the course of the next week we’ll be making it clear to those insurers through a series of meetings that this is a business with real momentum and one that’s at arm’s length from any issues within the parent company.
“We’re confident once insurers fully understand our position – trading strongly and independent of Steinhoff – they will be able to offer additional reassurances to our suppliers.
“In the meantime, we expect no impact on the business in terms of supply.”
The retailer added that deliveries to its distribution centres were still arriving and that they would continue to do so “into the New Year and beyond”.
“While we cannot predict the consequences for Steinhoff because of events in the last 10 days, we are as excited today about the growth prospects for Poundland and Dealz as we were last month,” the internal document said.
“Nothing that is happening thousands of miles away in South Africa will change that.”
Steinhoff is set to meet with lenders and credit insurers including Atradius and Euler Hermes in London tomorrow to quell concerns about the business’ long-term viability.
The South African conglomerate, which also owns retailers including Harveys, Bensons for Beds and Mattress Firm in the US, has seen its shares crash 80% since it postponed its full-year results last week as a result of “accounting irregularities”.
The retailer’s former chief executive Markus Jooste and executive chairman Christo Weise have both resigned in the wake of the scandal.