Poundland made a number of accounting errors in the year before its sale to Gordon Brothers, including overstating sales by £61m.
Sales reported for the year to 29 September 2024 included internal trading between Poundland stores in UK, Republic of Ireland and the Isle of Man, which should have been excluded.
The error had no impact on profit for the year because cost of sales was also overstated by £61m, according to newly filed accounts at Companies House.
A review of the business prior to its sale also revealed £17m in property and equipment that management concluded “no longer existed or could not be substantiated as valid assets of the company”. The shortfall was offset by a £6.1m reduction in depreciation, resulting in a £10.9m lowering of stated property and retained earnings.
A further £22.5m reduction in retained earnings arose from the accounts payable ledger, which included advance payments made for goods or services that had not been received.
In errors first reported by The Times, Poundland also miscalculated lease liabilities, contributing to a £32.5m reduction in net assets.
The errors occurred in the year prior to the period covered by the accounts, which is the 52 weeks to 28 September 2025, in which Poundland’s pre-tax losses nearly doubled from £45.4m to £85.2m.
Revenue fell from £1.8bn to £1.6bn.
Poundland was sold by Pepco Group to US investment firm Gordon Brothers for a nominal £1 in June last year. The discount chain has a long-term secured loan of £30m from Pepco Group and up to £125m in financing from Gordon Brothers, £30m of which is in place until August 2027.
The accounts raise a material uncertainty over Poundland’s ability to continue as a going concern if further funding is not secured before that date. However, the directors remain “confident in the company’s ability to secure the replacement funding”, according to the accounts.
“The directors have a reasonable expectation that the company has sufficient resources to continue in operation for the foreseeable future, which is considered to be the period through to the end of full-year 2027,” the accounts said.
“Full-year 2025 has been a reset moment for the company. A return to our core value proposition and simpler trading operation is showing significant year on year improvement after a difficult full-year 2025.”
Last week it emerged Gordon Brothers is already considering selling Poundland, having appointed Alvarez & Marsal to advise on an auction.
A trading update from Poundland on Thursday revealed like-for-like sales fell by 1.5% over the nine months to 30 June 2026. Like-for-like volume sales rose by 5% but price drops meant it did not feed through to value sales growth.
The 1.5% drop in like-for-like value sales is an improvement on a 2.9% decline in the quarter to 28 December 2025.
EBITDA was “broadly in line with expectations” and “over £70m ahead of the same period in full-year 2025”.
Commenting on the latest full-year accounts, which were two months overdue when filed at Companies House, a Poundland spokesman said: “The filing is historic, covering old ground from a period that ended in September 2025, that reflects the challenging year that led to the well-documented need for a comprehensive restructuring plan.
“Since the period covered by the filing, Poundland’s made very significant progress under fresh leadership, returning, as we announced last week, to profitability.
“Poundland is a business of scale with strong loyalty from customers who are responding very positively to our new ranges combined with simplified and lower prices.”
He said the accounting errors had no impact on overall profit or like-for-like sales reported in previous updates.
Union Usdaw has been urgently seeking clarity from the company after learning of the possible sale through news reports last week.
“While some media reports were not entirely accurate, the company have confirmed that they are exploring investor options and have appointed a management consultancy to assess approaches,” said Usdaw national officer Bally Auluk.
“They also advised that a sale might not happen.
“This is a difficult time for our members, coming so soon since the last takeover and restructure.
“However, we have been assured that the company will keep us updated with any developments throughout the process and we are providing our members with the support they need during this period of uncertainty.”
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