poundland store exterior (1)

Source: Poundland

New WH Smith owner Modella Capital is reported to have made it to the shortlist of bidders to acquire struggling Poundland.

The private equity firm, which recently bought WH Smith’s high street stores for £76m, is said to be among a handful of bidders notified in recent days that they have made it through to a second stage of the auction of Poundland.

Modella’s interest in Poundland was revealed in April, after it was put up for sale by owner Pepco Group, with Teneo advising.

Modella also acquired arts crafts retailer Hobbycraft in August last year, followed by The Original Factory Shop in February.

Among the other suitors for Poundland are Endless, the turnaround investor, and Hilco Capital, according to Sky News.

Warsaw-listed Pepco Group confirmed in March that it was “actively evaluating all strategic options to separate Poundland from [the] group… including a potential sale”. It followed three consecutive quarters of decline in like-for-like sales for the UK discount chain.

Sales have suffered in a disastrous transition to source clothing and general merchandise at group level through Pepco, which left gaps in crucial ranges such as DIY. Industry insiders have criticised a decision to let the UK buying team go in the transition, leading to a loss of expertise in discount sourcing.

Pepco also confirmed the permanent appointment of Barry Williams as Poundland MD in March. Williams was previously Poundland MD from 2017 to 2013, when he was parachuted in as MD of Pepco, Poundland’s sister retailer in Europe, to address underperformance.

Modella Capital was approached for comment.