Pepco, the discount retail giant, is planning to offload its Poundland business by September as the brand grapples with soaring costs and dwindling sales.
In a market update this morning, Pepco reported that Poundland continues to face "challenging trading conditions", with revenue falling 6.5 per cent in the first half of the year, as reported by .
The discount retailer now anticipates delivering underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of approximately €0m to €20m, a significant drop from the previously forecasted €50m to €70m.
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This disappointing performance by Poundland starkly contrasts with Pepco's overall results – the parent company saw a 9.3 per cent rise in revenue to £2.17bn.
Pepco attributed the downgrade to "highly challenging trading conditions", which have been exacerbated by the clearance of old stock and issues with product availability.
The company also announced that a turnaround plan is in progress "to rebuild core heritage category strengths", while concentrating on a simpler in-store offer and price points.
Barry Williams was reinstated as Poundland Managing Director in March 2025 to spearhead the turnaround.
New leadership needed to 'revitalise' Poundland
Pepco has stated that it is "actively exploring" a sale of Poundland, and anticipates an exit for the business before the end of the 2025 financial year, which concludes in September.
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"With consumer demand for value rising, the business is well-positioned for recovery under revitalised leadership," Pepco said.
A source familiar with the situation informed The Times that the business is expected to change hands for "effectively a pound" due to the investment required to revitalise the company under new proprietorship.
While Poundland found success during the economic downturn, it has since encountered heightened rivalry from supermarkets and other bargain retailers in recent times.
Compounding the issue are increased costs stemming from a higher minimum wage and elevated national insurance contributions (NICs).
Nonetheless, it has faltered more significantly than its budget retail counterparts—Home Bargains witnessed a surge in last year's sales, while B&M anticipates only a modest dip in profits for 2025.
Poundland's challenges have been accentuated by logistical issues, such as the Red Sea shipping disruption, as well as inadequate stock variety and substantial debt burdens.
The Times disclosed that Gordon Brothers is leading the charge to acquire Poundland, though the acquisition is poised to result in notable store closures and the potential loss of about 200 jobs.
Modella Capital, recently involved in acquiring WHSmith's high street division, and Hilco Capital, which owns Lakeland, are also among the parties showing interest.