Poundland cannot buy stock as owner freezes £50m ahead of Thursday deadline
Poundland is unable to buy new stock for its 600 shops because its American owner, Gordon Brothers, has frozen about £50m in the chain’s bank accounts, leaving it “running on fumes” with until Thursday to secure a rescue, when a ten-day moratorium protecting it from creditors expires. Gordon Brothers, which bought the retailer for £1 last June, rejected a takeover bid that could have saved thousands of jobs; London-based Xyra Group is now seen as the front-runner. Some 11,000 jobs are at stake.
The chain filed a notice of intention to appoint administrators last week, and an extension of the moratorium is now thought increasingly likely; one source expects the owner to release funds within two days. Poundland’s boss, Barry Williams, says like-for-like sales rose 11.4% last week and are £1.5m ahead of budget, and that the business made an unaudited £18.1m profit in the year to September after losing £68m the year before. Gordon Brothers, which has taken about £18m in interest, fees and charges since buying the business, describes it as “challenged and vulnerable to any potential downturn”. Its executives appear before the Commons business committee in private on Wednesday. Poundstretcher, Tesco and B&M have shown interest in picking up stores if the chain breaks up. Andy Burnham said last week there was an “opportunity to save jobs” and that talks between Jonathan Reynolds and the owner had been “reasonably constructive”: “We’re in a better place at the end of this week than we were at the end of last week, but it’s not done yet.” The figures on frozen cash and stock come from the BBC’s reporting alone. Watch Wednesday’s committee and Thursday’s deadline.