Poundworld is preparing to launch a CVA, which could see it close up to a quarter of its store estate.
The move could result in up to 1,500 job losses if the proposed company voluntary arrangement (CVA), which is set to be announced next month, is approved.
The embattled value retailer, which has 5,500 employees, has drafted in Deloitte to draw up the potential CVA.
As well as axing up to 100 of its 355 stores, Poundworld is likely to seek reduced rents on a host of other shops.
Poundworld, whose chief executive of less than two years Gerry Gray exited with immediate effect last December, recorded a pre-tax loss of £17.1m in the year to March 31.
The TPG Capital-owned business is being helmed by executive chairman Steve Johnson while a successor for Gray is sought.
Poundworld is the latest in a line of retailers that have launched CVAs in recent months, including Carpetright, New Look and Select.
House of Fraser and Mothercare are also understood to be considering launching similar proposals in a bid to exit underperforming sites and slash rents.
Poundworld’s struggles come amid a turbulent time for the value sector. Rival Poundland recently secured a £180m loan facility following an accounting struggle at its parent company Steinhoff, while Wilko axed 1,000 staff in October following an 80% slump in full-year profits.
Poundworld declined to comment.
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