The contest to be Poundland’s next owner is said to have narrowed to a two-horse race, with Hilco and Gordon Brothers shortlisted by current owner Pepco Group.
Hilco and Gordon Brothers were among a clutch of private equity firms circling the struggling discount chain, along with Modella Capital, Endless and Alteri Investors, in an auction advised by Teneo.
Modella, which recently acquired WH Smith’s high street stores, is the latest to have been eliminated, leaving Gordon Brothers and Hilco in a two-way race, according to Sky News, which cites a Pepco insider.
The source said a decision on a preferred bidder was likely in days. The winner is expected to have to stump up a cash injection of more than £50m to turn Poundland around, as well as repaying about £30m of debt owed to Pepco.
Read more: Who are the private equity firms in the race to snap up Poundland?
About 100 of Poundland’s 825 stores are thought to be earmarked for closure by the new owner.
Gordon Brothers is a former Laura Ashley owner, while Hilco’s recent deals include funding a management buyout of family-owned homeware retailer Lakeland in April.
Pepco Group’s first-half results yesterday revealed Poundland revenue fell 6.5% to £985m in the six months to 31 March, as poor trading continued from last year.
Poundland profit guidance for the full current financial year was cut to between €0m and €20m, down from €50m to €70m.
A Pepco spokesperson said: “After evaluating a range of alternatives, the group is actively exploring a potential divestment of the Poundland business, as stated at its half-year results on 22 May. This process is advancing and a further update will be provided at the appropriate time. The group expects to complete the separation of Poundland during the current financial year.
“Poundland remains a key player in UK discount retail, serving over 20 million customers annually. With consumer demand for value rising, the business is well-positioned for recovery under revitalised leadership. A clear turnaround plan – including reduced costs and operational refinements – aims to restore profitability.”
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