Struggling value player Poundland is reportedly mulling plans to force through steep rent cuts on its properties in a bid to slash mounting costs.
Hundreds of stores have reportedly been earmarked for rent reductions by its parent company Pepco, in a bid to shore up its balance sheet during the retailer’s ongoing attempt to find a buyer for the struggling chain according to The Telegraph.
Pepco has singled out some 200 stores to shutter imminently and some 500 more than it has selected for rent bill decreases.
It hopes to slash rents by between 10% and 50% on some stores, while it plans to pull the others out of agreements altogether through a restructuring scheme – such as a company voluntary arrangement.
The race to buy the retailer has reportedly narrowed down to two leading candidates, with Hilco and Gordon Brothers both vying for control.
Poundland drove through big rent reductions during the pandemic, when it made average savings of more than a third on some 200 of its stores.
It also earned the ire of landlords for failing to pay rent at all on some of its stores during Covid for several months.
In May, Pepco said the board continues to actively explore separation options for the Poundland business with an exit expected by the end of FY25.
Dropping Poundland sales led to a marginal decrease in like-for-like revenue for parent group Pepco in its H1 2025 results, despite sales increases at its other brands Pepco and Dealz. Reported sales were nevertheless up by 4.3% to reach €3.3bn (£2.7bn).
Like-for-like sales at Poundland dropped by 7.3% in the six months to March 2025 versus the same period a year before.
Pepco sales by the same measure increased by 2.3% and Dealz sales were up 2.3%. This translated to a 0.7% decrease in like-for-like revenue growth for the Polish company.
Poundland’s shrinking margins also impacted the wider group, with the business reporting a “material decline in Poundland EBITDA” offsetting “strong Pepco EBITDA growth”. The underlying EBITDA of €460m (£388m) was down 5.5% on H1 FY2024.
Pepco chief executive Stephan Borchert said: “At Poundland, trading remains challenging, which is reflected in a profit outturn below expectations for H1 and a weaker outlook for the full year.
“Barry Williams, who was reappointed as Poundland managing director in March 2025, and his team are actively driving a recovery plan to help turn around the business by refocusing on its traditional core strengths. We continue to undertake a process to separate Poundland from the group, as part of a wider strategy shift away from FMCG, with a divestiture expected before the end of FY25.”
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