The Poundstretcher discount chain wants to open 50 new stores next year – despite being in the midst of a store closure programme as it tries to cut costs.
According to a poster produced by the business, it is on the look-out for dozens of new sites to open in 2021 – ranging from existing shop units to development sites in town centres and out-of-town retail parks.
The poster said the business is looking for freehold or leasehold properties, with A1 planning consent “preferred but not essential” and “temporary and flexible arrangements considered”.
READ MORE: {}
It also offers a £500 bonus for successful tip-offs.
It comes as creditors of the Leicestershire headquartered business have agreed to a company voluntary arrangement (CVA) to help Poundstretcher 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 such wholesale closures could make a business the size of Poundstretcher unsustainable.
He understood the number of stores in line for closure would be closer to 100 – with around half of those already shut.
He said: “So far about 50 stores have closed down either because they were on the list for closure or were stores where the landlord was not willing to reduce the rents.
Most Read
“From what I’ve heard there a lot of other stores that might be performing well, that they were not hoping to lose, but where the landlord doesn’t want to give any reduction.
“That could be a further 50 stores that could go.
“I think what the Press was saying – that 50 per cent of all stores are at risk – was wide of the mark.
“If half the stores went the company would not be viable, so it would be more like 50-75 closures, then rent reductions for some of the mid-performing shops.
“That’s a way of saving the business. But with some of the sites where they want rent cuts the landlord might not be willing to accept that because they will know they can rent the space out to someone like B&M.
“B&M is being quite aggressive with store openings, and Home Bargains are opening stores too, but on a more modest level.
“The discount sector is buoyant but you have to be a strong operator to do well.”
Don’t miss
He also estimated the business had saved more than £20 million through the 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.”
Business-Live tried to contact Poundstretcher’s property and legal director for comment.
A spokeswoman for KPMG, meanwhile, which is handling the CVA, said they had no update.
However in July it was reported that the futures of 253 stores 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 also 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.
At the time Will Wright, restructuring partner at KPMG and joint supervisor of the CVA, said: “The approval of the CVA provides a stable platform from which the company can continue to operate across a more focused store portfolio.”
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.