Poundland’s owner is mooting a possible sale of the UK discount retail chain as it struggles amid tough sales and before incoming budget measures that will send wage costs soaring. Poland-based Pepco said it was considering “all strategic options” to spin out the struggling 825-strong chain from the wider group as focus on its more profitable Pepco brand.
It said Pepco makes the “vast majority” of group earnings and the group wants to “further build on that strong base ultimately as a single pan-European format”. The group said: “Poundland is a strong brand that serves millions of customers every week and had around 2 billion euros (£1.67 billion) in annual turnover in financial year 2024, but it is also operating in an increasingly challenging UK retail landscape that is only intensifying.
“From April 2025, the UK Government’s additional tax changes announced in the budget will also add further pressure to Poundland’s cost base. “Therefore, the board is actively evaluating all strategic options to separate Poundland from Group during financial year 2025, including a potential sale.”
In January, the parent firm ofPoundlandsaid it was taking “immediate measures” to turn around the performance of the chain after a sharp drop in sales.Pepco Group said the UK business, will increase the number of products it sells for £1 or less as part of efforts to get the chain “back on track”.
In recent years, Poundland has expanded its range of products being sold at price points above £1 in an effort to take on rival retailers such as B&M. However, on Thursday, the retailer said: “We are refocusing on its long-time strengths, such as recently increasing the number of core items at £1 or below from 1,500 to almost 2,400 in all UK stores.”
Pepco said that recent trading at Poundland stores was challenging as the UK retail environment became tougher towards the end of 2024. Poundland revenues slid by 9.3% for the three months to December 31, with like-for-like sales down 7.3%, as it witnessed weaker clothing sales.
The group also confirmed that it closed 13 Poundland stores over the quarter, with only two new store openings. It stressed that Poundland will not increase its store numbers over the current financial year as it focuses on improving sales.
Meanwhile, the wider Pepco Group saw overall revenues grow 8.4%, supported by the opening of new Pepco and Dealz stores. Stephan Borchert, chief executive officer of Pepco Group, said: “The group delivered a mixed performance in its first quarter, with a strong performance from both the Pepco and Dealz brands, partially offset by Poundland’s ongoing challenges.
“Poundland saw like-for-likes fall, largely driven by continued underperformance in clothing and general merchandise following the transition to Pepco-source product.
“Getting Poundland back on track is a key priority – we are undertaking a comprehensive assessment of the business and taking immediate measures on improving cash performance and strengthening the customer proposition.”