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Poundworld appoints administrators

Struggling value retailer, Poundworld, is thought to be on the verge of appointing administrators Deloitte in order to protect the failing business from creditors between ten days and two weeks.

5,300 jobs are now at risk but staff and suppliers will continue to be paid for this two week period. The company has 355 stores, now threatened with closure. Around 100 of those stores had already been earmarked as being at risk.

The development follows failed buyout talks between Poundworld’s US owners, TPG Capital and retail turnaround advisors, Alteri Investors. TPG recently dropped plans to start CVA proceedings in favour of a sale.

Poundworld has turned down previous offers to sell the business via a pre-pack administration but is now thought to be reconsidering this option with private equity firm R Capital.

In the 2016 – 2017 business year Poundworld’s losses ballooned to £17.1 million, up from £5.4 million in the previous year. The higher figure includes a £5.7 million charge for burdensome leases.

Poundworld was launched in 2004 in Yorkshire after rebranding from Everything’s a £1. The company grew rapidly as the budget retail trade boomed, but hit controversy a few years ago when it’s auditor KPMG resigned, saying the stocktaking results were “misleading”. It joins a growing list of large multiple retailers to have hit the buffers in the hugely competitive and increasingly challenging UK retail trade.