An iconic discount retailer with more than 800 stores has been put up for sale as it struggles ahead of the incoming Budget measures which will send wage costs soaring.
The brand said it was considering ‘all strategic options’ as retailers have been among the hardest hit by incoming measures announced in last October’s Budget to increase national insurance contributions, on top of another hike in the minimum wage.
Poland-based Pepco Group, which owns Poundland, hopes to spin out the struggling 825-strong chain from the wider group as it focuses on its more profitable Pepco brand.
The firm 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’.
It came as Pepco warned over annual earnings at Poundland amid ‘more difficult’ trading conditions and as costs surge.
Underlying earnings will come in at between £41.9million and £58.6million as sales remained in negative territory over January and February, Pepco said.
Pepco said: ‘Poundland is a strong brand that serves millions of customers every week and had around two 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.
An iconic discount retailer with more than 800 stores has been put up for sale as it struggles ahead of the incoming Budget measures which will send wage costs soaring
Pepco warned over annual earnings at Poundland amid ‘more difficult’ trading conditions and as costs surge
Stephan Borchert, chief executive of Pepco Group, said: ‘The board and I are actively exploring separation options for Poundland, including a potential sale’
‘Therefore the board is actively evaluating all strategic options to separate Poundland from group during financial year 2025, including a potential sale.’
Pepco will also look at options to offload the Dealz business in Poland further down the line, but will continue to manage the chain for now, while it confirmed it is reviewing its Pepco chain in Germany.
As part of the plans, Pepco said former Poundland managing director Barry Williams, who took over as managing director of Pepco in September 2023, will return to his former role at Poundland ahead of a possible sale.
This comes as MailOnline reported in December Poundland had seen a ‘significant decline in performance’, and a ‘weaker outlook’ for profits and rising costs.
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The slump comes as an ambitious growth plan for the brand which saw it open 23 new stores in the last financial year in addition to rebranding 64 former Wilko stores into Poundland shops.
Shoppers have seen rising prices in recent years after Poundland first dropped its ‘everything’s a pound’ slogan in 2017, pricing all its products between 50p and £5.
Research by MailOnline last year showed that some items had increased by up to 50 percent in price since.
Stephan Borchert, chief executive of Pepco Group, said: ‘The board and I are actively exploring separation options for Poundland, including a potential sale, from the group, with consideration also given to the separation of the well-performing Dealz Poland over the medium term.
‘Barry Williams did a great job as managing director of Pepco, returning it to like-for-like sales growth, and I am confident he will play a pivotal role in getting Poundland back on track, given his previous success there.’
