Poundstretcher is understood to be looking at closing a quarter of its stores as an outcome of a review of its finances.
The high street discounter has already closed around 30 stores during lockdown, in some cases permanently where leases have expired, according to a source within the company. The rest of the estate has continued to trade as an essential retailer, thanks to food and household ranges.
In Poundstretcher’s latest full-year accounts, published at the end of March, owner Aziz Tayub warned the future of the company depended on a cost reduction strategy.
The business has hired KPMG to review its finances.
“They’ve been closing around two stores weekly since of the beginning of lockdown,” said the source.
“Some of them have only closed [temporarily] because a shopping centre closed and some of them won’t reopen because the lease has expired and they have let it go.
“They are saying one quarter of the stores will be shut,” the source added.
Locations of stores to have recently closed, either temporarily or permanently, include St Austell on 11 June, Pembroke Dock on 9 June, Wigan on 10 May, Bletchley on 11 April, and Grimsby on 9 April.
Poundstretcher did not respond to a request for a comment.
The latest accounts, for the year ending 31 March 2019, put the estate at 450 stores, up from 394 the year before. Turnover had risen 12.2% to £434.6m but profits slumped from £2m to a £227,000 loss before tax.
Tayub said in the accounts: “At the time of approval of the financial statements there are material uncertainties over the outcome of the cost reduction strategy that may cast doubt over the company’s ability to continue as a going concern.”
Since autumn 2018 the company had been opening new stores under the ‘Bargain Buys’ banner, as well as converting a number of existing sites to the new fascia. The plan was to eventually convert the whole estate and attract a new customer base by aligning Poundstretcher more closely with ‘big shed’ discounters such as Home Bargains and B&M.
However, a source told The Grocer in March this year that the name change had delivered on none of the company’s expectations and under-trading stores had led it to consider a range of options including discussions with landlords.
Poundstretcher has faced criticism from staff during lockdown for not installing screens at checkouts, although it has provided other protective equipment such as face shields and gloves.
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