Poundland is preparing to seek emergency funding after a disappointing Christmas season heightened concerns about the discount retailer’s recovery.
The chain is set to take advantage of a £30m overdraft provided by its former owner Pepco after footfall and sales fell short of expectations over the festive period. The move follows a difficult few months for the retailer, which was rescued by troubled investment specialist Gordon Brothers in a court-approved restructuring deal in the summer.
Gordon Brothers acquired Poundland for a nominal £1, a deal that saved most of the 16,000 jobs in 825 UK stores but also paved the way for widespread closures. As part of the agreement, Pepco agreed to provide financial support, including an immediate loan of £30 million and a further credit facility of £30 million in the form of an overdraft.
Since taking control, Gordon Brothers has closed two warehouses and 68 of Poundland’s worst-performing stores, putting more than 2,000 jobs at risk as Gordon Brothers attempts to stabilize the business and return it to profitability.
However, trading conditions continued to deteriorate over the Christmas period. Data from Sensormatic shows that footfall on UK high streets fell 13 per cent year-on-year on December 23, typically one of the busiest shopping days in the calendar. Retailers are also expecting a weak start to 2026: the Confederation of British Industry reports that sales expectations are now at their lowest level since March 2021.
Against this backdrop, Gordon Brothers told Pepco in recent weeks that it intended to access its overdraft facility after revenue fell below forecast, leading to a short-term liquidity squeeze. Poundland plans to access the funds in two stages, with a first tranche in January and further access later in the year.
Pepco is said to have initially resisted the request, raising new questions about Poundland’s longer-term prospects, but an agreement was ultimately reached at board level, easing immediate concerns about the retailer’s liquidity position.
A team of consultants is closely monitoring the turnaround. Gordon Brothers has brought in forensic accountants from AlixPartners to monitor cash flow, while Poundland’s board has appointed FRP Advisory as specialist corporate finance advisers.
As part of the restructuring plan, Poundland is expected to close around 130 stores by February next year. Sales are already underway at locations slated for closure with discounts of up to 40 percent.
Earlier this week, the retailer confirmed it would remain closed on Boxing Day, Boxing Day and New Year’s Day, continuing its policy aimed at prioritizing staff wellbeing.
A Poundland spokesman said the restructuring had created sufficient financial headroom to implement turnaround plans and stressed that the company continued to receive full support from both Gordon Brothers and Pepco. “Although there is still much to do, we are pleased with the progress we have made over the last few months as we work to get the business back on track,” the spokesman said.
Pepco declined to comment.
