Poundland sold for £1 with shops set to close

Struggling budget chain Poundland has been sold for £1 and now faces a shake-up which could see up to 100 stores close, the BBC understands.

Its owner Polish firm Pepco confirmed it had sold the brand for a "nominal" sum to US investment firm Gordon Brothers.

Poundland has 825 UK stores and around 16,000 staff and was struggling to compete with other discount stores, with sales down this January and February.

Following the sale a proposed restructure will be put to the High Court in England, Pepco said.

It comes after Pepco warned that increased employer National Insurance contributions which kicked in in April would put added pressure on the chain.

Pepco Group has owned Poundland since 2016, but the firm had to auction the brand off after sales slumped over the past year.

Gordon Brothers is a global investment firm which formerly owned fashion label Laura Ashley.

Pepco said it was effectively offloading an unprofitable part of the business and Poundland remained a well-loved brand with millions of customers annually.

But retail analyst Sofie Willmott from GlobalData said Poundland's appeal has been waning as UK consumers sought better quality and value for money elsewhere.

"Those who favoured Poundland for low price groceries have been tempted away by the supermarkets who have been aggressively competing on price, and the failure of its clothing range has been a distraction for the retailer", she said.

Consumer expert Kate Hardcastle said a sale for a nominal amount "often signals a business model that has struggled to keep pace with market forces,

"In this case, it reflects not just internal challenges but profound shifts in how consumers now shop," she said.

Brands such as Temu and Shein have "fundamentally changed consumer expectations around price, speed and convenience", she added.

She said this put "unrelenting pressure" on the likes of Poundland.

"Against that backdrop, the once-simple promise of a 'pound shop' no longer carries the same weight or differentiation".

Following its sale the business will continue to be led by Barry Williams, currently managing director of Poundland, it said.

The business will continue to operate under the Poundland brand in the United Kingdom and under the Dealz brand in the Isle of Man and Republic of Ireland, it added.

"We want to sincerely thank all the Poundland team for their ongoing commitment and contribution to the group and wish Barry Williams and his team all the best for the future," said Pepco chief executive Stephan Borchert.

In March, Pepco said Poundland was "operating in an increasingly challenging UK retail landscape that is only intensifying".

"Pepco Group expects to obtain a minority investment interest in Poundland", Pepco wrote in a release.

Gordon Brothers is investing a total of £80m in Poundland which includes an existing secured loan of £30m and a further £30m overdraft.

Mark Newton-Jones, head of Gordon Brothers' Europe group said it was "delighted" to provide financing for "the substantial turnaround of this iconic retailer".

He added: "We believe Poundland is an essential retailer serving UK consumers and plays an important role on the High Street."

He said the group would "ensure we continue providing exceptional value to budget-conscious consumers in the UK."