High Street

EXCLUSIVE: Poundworld confusion as staff memo casts doubt on ‘closing down’ sale

Store managers at Poundworld are preparing to promote a ‘closing down’ sale, despite a staff memo circulated yesterday which cast doubt on whether any stores will actually shutter.

The memo, which was written by administrators at Deloitte, and which a Poundworld spokesperson told Retail Sector had been circulated as an “update to all employees”, said: “As you are all aware, trading has been difficult for a substantial period of time. It has been decided that stores are to commence “closing down” sales. For clarity, this does not mean that stores will definitely close.”

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Poundworld began to face difficulty after a rough Christmas trading period which prompted it to seek a Company Voluntary Agreement (CVA), only to abandon this after it received an expression of interest from a possible buyer.

Later another buyer expressed interest and subsequently pulled out, meanwhile management mulled the closure of 117 stores and the possibility of collapse before appointing Deloitte as administrators.

The wording raised questions about why a ‘closing down’ sale could be taking place when there is no indication as yet that all or any stores are likely to cease trading. The memo continued: “The strategy is to continue to trade the business in order to realise the stock, whilst also seeking to secure a sale of the business either in whole or part.”

Poundworld managers in various UK regions had differing views of what has been communicated to staff and when a closing-down sale might begin. Asked if she was aware of either the memo or an impending closing down sale, a manager in a store in a northern region said she had not.

Meanwhile an assistant manager in a London store said Poundworld has not yet told staff which stores will be closing down, if any at all. The manager said: “We’re just taking everyday as it comes.” A Scottish store manager said he had received the memo and that his store was preparing for a closing down sale.

An East Anglian store manager confirmed they received the memo yesterday and said pricing for the sale will go out today and that posters will go up tomorrow advertising it.

A source close to the management team told Retail Sector: “Administrators have come on board last week and they are always having to go through that process of winding down a company. What tends to happen in a lot of instances is that they will want to get through the stock and the best way of doing that is having what they are calling a closing down sale.

“It’s basically to drum up attention and get people on the street, notice [the sale] and go inside and get some of the deals.”

The source added: “The reality is conversations are still going on with potential bidders alongside that, the hope is that part of the business at least will be bought by somebody. Who knows what form that will be, so when we get an update from them, which will be early next week, it is difficult to say exactly which stores, if any, or all, will be closed.”

Dave Gill, national office at trade union Usdaw, told Retail Sector: “All staff in the business remain deeply concerned about their jobs and we continue to seek talks with the administrators so that we are able to best represent the interests of our members.

“Regrettably Poundworld did not recognise Usdaw and they did not keep us informed of problems in the business. We urge the administrators to engage with Usdaw to help save jobs as they seek a buyer for all or part of the business.”

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