Poundland founder Steve Smith has warned that employees could be out of work for years if the retailer collapses, and urged its owner, Gordon Brothers, to accept a buyout offer from Northern Ireland’s Martin Property Group. The chain’s 12,000 staff face uncertainty in the run-up to Christmas.
Smith, who opened Poundland’s first store in Burton upon Trent in 1990, said that lost jobs would not easily return to Britain’s high streets. He said retail work was difficult to find and that employees depended on their weekly wages.
Poundland’s future is in doubt after the retailer filed a notice of intention to appoint administrators at the High Court. The measure protects it from creditor demands until 12 November while a solution is sought. Suppliers have held back deliveries, affecting the chain’s ability to trade and increasing the risk of store closures and job losses.
Gordon Brothers is understood to believe that breaking up the retailer could raise more money than accepting Martin Property Group’s offer. The proposed deal reportedly includes about £7.5m upfront and a further £7.5m in deferred payments over two years, alongside the assumption of an asset-backed loan of about £90m. It would repay only half of a £30m shareholder loan.
The offer has been rejected by Gordon Brothers, although Pepco, a former Poundland owner that holds the other £7.5m of the debt, is prepared to wait for repayment in the hope of saving the business. Smith said he was willing to support Martin’s offer but added that the group did not need his money. He said he had made an offer when Poundland was first put up for sale but had not received a response, and that it was now too late for him to make another bid.
Smith said the consequences could extend beyond Poundland’s direct workforce. The retailer has more than 2,000 suppliers, some of which work exclusively with the chain or employ hundreds of people. He estimated that as many as 30,000 jobs across suppliers, stores and other affected high-street businesses could be at risk. Poundland brings four to five million customers to towns and shopping centres each week, he said, meaning neighbouring retailers could also suffer.
Poundland’s management is scheduled to meet Kate Dearden, the minister for the future of work, on Wednesday as pressure grows on Gordon Brothers to accept the offer rather than proceed with an administration and potential breakup. Smith said the retailer had been restructured and was beginning to improve.
Sources: The Guardian Business.