Poundworld faces collapse after rescue talks fail

The discount retailer had been in talks with private equity firm R Capital over the weekend, but administrators have been called in after the negotiations broke down.

With others sharing sympathy for the staff.

The company employs about 5100 people at 335 stores nationwide.

The announcement comes after both Toys R Us and Maplin fell into administration earlier this year.

Clare Boardman, joint administrator of Poundworld, said that the chain had been affected by the "challenging" retail environment.

'Unfortunately, this has not been possible.

A TPG spokesperson said it was a "difficult decision for every party involved".

Deloitte said Poundworld would trade as usual while it seeks a buyer for all or part of the business, adding that no redundancies or store closures are yet planned.

Clare Boardman, joint administrator, comments: "The retail trading environment in the United Kingdom remains extremely challenging and Poundworld has been seeking to address this through a restructure of its business".

Other parties named as possible buyers were turnaround specialist Alteri Investors and Poundworld's founder Chris Edwards.

Poundworld's losses widened in 2016-17 to £17.1 million, from £5.4m of losses the year before.The retailer was hit with a £5.7 million charge for onerous leases, a provision retailers make when the cost of a lease is no longer covered by the income of the store.

A report by the Centre for Retail Research suggested that 31,000 stores would close and 552,500 High Street jobs disappear between 2017 and 2022.

The company is seeking landlord approval for the restructuring plan, which is a form of insolvency known as a Company Voluntary Agreement (CVA).

"Retailers" problems are caused by a decade of weak growth, new consumer behaviour - buying online but also spending more on experiences, travel and eating out - higher labour costs, uneconomic rents and business rates'.

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