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Poundstretcher is facing a risk of closure across the majority of its estate, following news it is launching a CVA in a bid to seek rent cuts from its landlords.
According to Sky News, the discount retailer has initiated a “radical” restructuring programme that will seek to cut rents at around 330 of its 450 stores across the UK.
The CVA proposal would reportedly put an “unspecified number” of jobs at risk, however, amongst the retailer’s 5,500 employees within its stores, head office and warehouses.
The number of redundancies will ultimately be “dependent” upon the outcome of talks with landlords, according to Sky News.
The proposals are now being supervised by KPMG, and could be launched “as early as Friday”.
Sources told Sky that the drafted proposals would see 250 Poundstretcher stores initially pay full rent for a six-week period, after which there would be “commercial discussions” with landlords.
While some landlords have been paid arrears, the latest proposals would also allow all remaining arrears to be paid if the move is approved by creditors, according to Sky.
In its last published accounts, the discount retailer recorded a £230,000 pre-tax loss in the year ended 31 March 2019, compared with a £2.1m profit made the year prior.
At the time, the retailer said it faced a “number of risks and uncertainties”, with its trading activities “affected by the underlying economic climate”. In addition, SKy News reported that the retailer has been “heavily loss-making for at least the last 12 months”.
A source told the outlet that the new proposal was now “necessary to rebuild profitability in a torrid retail environment”.
