Poundland owner weighs changes as it calls in advisers

Pepco Group has hired AlixPartners to address the ongoing slump in sales, raising the possibility it is exploring a sale of the retailer or is exploring a formal restructuring process which could lead to store closures and job losses.

Sky News reported that AlixPartners were formally engaged last week, with options ranging from a company voluntary arrangement or restructuring plan on a “highly preliminary basis”.

Sources close to Pepco said that no decisions have yet been made, and that the immediate focus of the advisers would be on improving Poundland’s cash performance reviving its customer proposition.

Earlier in the week, Warsaw-listed Pepco Group said Poundland had seen a like-for-like sales slump of 7.3% over Christmas and suffered “a more difficult sales environment and consumer backdrop in the UK, alongside margin pressure and an increasingly higher operating cost environment.

“We expect that the toughest comparative quarter for Poundland is now behind us – the same quarter last year represented a period prior to the changes made within our clothing and GM [general merchandise] ranges – and therefore, we expect the negative sales performance for Poundland to moderate as we move through the year.”

Pepco Group added that Poundland would not increase the size of its store estate over the course of the year.

“We are continuing a comprehensive assessment of Poundland to recover trading and get the business back to its core strengths, including undertaking a thorough assessment of all costs across the business, as well as evaluating its overall competitive positioning”.

The appointment of AlixPartners comes a few weeks after Pepco’s chief executive Stephan Borchert said he would consider “every strategic option” for reviving Poundland’s performance.

Borchert is expected to set out formal plans for a Poundland turn around at a capital market’s day in Poland in March.