Poundstretcher, the troubled discount store chain, has confirmed that it wants to open 50 new branches – even as dozens of others are closing.
Business-Live revealed earlier this month that the company was on the look-out for potential landlords and agents to support the plans to regain a foothold in 2021.
Now Poundstretcher and KPMG, which is handling a company voluntary arrangement (CVA) for the business, have confirmed the plans.
The initial report was based on a poster seen by Business-Live saying the chain was looking for potential units to take on, ranging from existing shops to development sites in town centres and out-of-town retail parks.
The poster said the business was looking for freehold or leasehold properties, with A1 planning consent “preferred but not essential” and “temporary and flexible arrangements considered”.
It was also offering a £500 bonus for successful tip-offs.
That came after creditors of the Leicestershire-headquartered business agreed to the terms of the CVA to help it offload underperforming outlets, realign its head office and pave the way for investment in its estate.
Despite speculation that half its 450 stores could go, one retail industry expert told Business-Live at the time that such wholesale closures could make a business the size of Poundstretcher unsustainable.
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He also warned things could get difficult for the chain when the pause in business rates ended in the spring.
A spokesman for Poundstretcher said: “Confirmed closed stores by the end of the year will be 57 since the CVA date of July 3.
“We are working on replacing these loss-making stores with more profitable stores in the locations by reaching agreements with landlords reflecting the current market conditions.
“We anticipate working with our current landlords to agree sustainable occupation for both the landlord and Poundstretcher.
“The current Covid-19 pandemic is disrupting the spending of all consumers in the 海角视频 and we are assessing the best options for our store estate.”
KPMG said the 50 new stores would help offset stores lost in the CVA through landlords exercising their option to take stores back.
It said the company needed to do that to maintain the “re-focussed, core estate the CVA sought to achieve, and cover overheads”.
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Back in July it was reported that the futures of 253 stores – half the Poundstretcher store estate – would “depend on the commercial merits of each store” in collaboration with landlords.
It is understood that 5,500 people were employed by the group as a whole at the time of the CVA.
The deal secured rent cuts of between 30 per cent and 40 per cent for 84 of its 450 stores, while it was agreed around 94 stores would continue to pay current rents.
Poundstretcher opted to launch the CVA after the impact of Covid-19 on store footfall “exacerbated” problems after a decline in profitability in recent years.
One retail industry expert told Business-Live even stores performing well could be shut if the landlords decided not to agree a cut in rents.
He estimated the business had saved more than £20 million through the current 12 month business rates holiday – but warned it would need to find that cash next year, assuming the business rate holiday period was not extended.
He said: “Next year, irrespective of the CVA, if there was no business rates exemptions the business would struggle, even if there are fewer stores.
“It’s very interesting that they now want to open 50 new stores.”