The owner of Poundland is considering a sale of the discount chain just over a year after buying the business for €1, sparking fears of further store closures and job losses across the British high street.
Investment firm Gordon Brothers, which also owns British retail brands Laura Ashley and LK Bennett, is in talks with financial advisers over launching an auction process for the retailer.
Advisers could be appointed to oversee the sale within days, according to Sky News, with bidders likely to include rival turnaround funds and private equity firms.
Rumours of a sale will raise fresh anxiety over the future of the retailer's workforce and store network. Poundland currently operates around 600 shops across the United Kingdom and employs 12,000 staff.
Restructuring and store closures
Gordon Brothers acquired the struggling discount business from Pepco Group in June last year for a nominal sum, thought to be around €1. Following the acquisition, the investment firm closed 200 Poundland shops as part of initial restructuring efforts.
At the time of the buyout, Gordon Brothers said it would provide up to £80million in financing to "support the management team's proposed restructuring and turnaround plan for the British discount retailer."
Under its revival strategy, the chain priced food products at £1, £2, or £3, with around 60 per cent of grocery items priced at its traditional £1 price point.
In January, managing director Barry Williams hailed "significant progress" in the recovery plan, raising questions over why Gordon Brothers has decided to explore a sale of the discounter so soon.
A spokesman for Poundland defended the chain's operational progress on Tuesday, citing customer value initiatives.
"We've made very significant progress over the past year with a recovery plan that's created simpler, better value for customers centred around thousands of items back at our iconic £1 price point," the spokesman said.
High street pressures and retail deals
In recent years, Poundland has struggled with a broader downturn in consumer spending despite offering cheaply priced merchandise. Well-known British high street names have fallen victim to a combination of shaky consumer confidence and a higher tax burden.
The potential sale of Poundland comes amid wider restructuring across the UK retail sector. Last week, Mike Ashley's Frasers Group bought luxury department store chain Harvey Nichols for the cut-price of £40million after warning it could run out of cash without further investment.
