The owner of Poundland has launched a formal sale process for the discount retailer, seeking to find a buyer within weeks after acquiring the business for just £1 little more than a year ago.
Private equity group Gordon Brothers has appointed corporate advisory firm Alvarez & Marsal to approach potential buyers as it seeks to capitalise on a restructuring that has reshaped the loss-making chain.
A formal sale process was launched on Wednesday, according to people familiar with the matter, with A&M expected to begin discussions with prospective bidders following initial interest from a number of parties.
TG Jones and Modella, the owner of Hobbycraft, are among the groups understood to have approached Poundland about a potential acquisition, according to Sky News.
Gordon Brothers acquired Poundland for £1 in June last year and has since implemented a substantial restructuring programme aimed at restoring profitability and responding to weak consumer demand.
The turnaround has included the closure of more than 100 stores across the UK, as well as a simplification of the retailer’s product ranges, pricing and operating model.
Poundland has reinstated straightforward £1, £2 and £3 grocery pricing across its UK estate and introduced simpler pricing structures across general merchandise and clothing.
The changes have been designed to return the business to the low-cost proposition that underpinned its expansion while reducing operational complexity and focusing investment on stores and ranges with stronger potential.
A Poundland spokesperson said: “We’re not going to be distracted from the successful recovery we’re putting in place through good old-fashioned back-to-basics retailing. Lower prices. New ranges. Better service.”
The sale process is expected to move quickly, with hopes within the business that a transaction can be completed before the crucial Christmas trading period.
For Gordon Brothers, a successful sale would mark a rapid turnaround in ownership of a retailer that was acquired from Pepco Group after mounting losses and pressure on its UK operations.
The investor’s strategy has centred on cutting the cost base while simplifying the proposition for shoppers, amid persistent pressure on household spending.
The proposed transaction also comes as discount and value retailers continue to compete aggressively for consumers whose spending power has been squeezed by higher living costs.
Gordon Brothers has pursued a similar strategy elsewhere in the UK retail sector. Earlier this year, it acquired the LK Bennett and Radley brands following their entry into administration.
Poundland’s prospective sale will test whether the restructuring has been sufficient to attract a strategic or financial buyer willing to invest in the next phase of the retailer’s recovery.
A transaction completed before the peak festive season would also allow a new owner to take control at one of the most commercially important periods of the year for Britain’s discount retailers.
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