The owner of discount retailer Poundworld, American private equity firm TPG Capital, is gearing up to announce a Company Voluntary Arrangement (CVA).
This could see it axe up to 100 of its 355 stores, with hundreds of jobs being lost as a result, sources close to Poundworld claim. If it goes down this route, to be overseen by Deloitte, it would be the second TPG Capital-owned company to resort to a CVA in as many months. Prezzo recently gained approval from creditors to shut many of its outlets.
“Even discount retailers are not immune from overcapacity in the market, weakening consumer demand and improving competitors,” observes Catherine Shuttleworth, CEO at Savvy. “Price inflation is also the pound retailer's greatest enemy. Shoppers are no longer prepared to be fobbed off by smaller products (shrinkflation) and product reengineering to match a pound price point. This business was at its most successful when it was simple and agile, unfortunately it feels like its new owners have introduced greater complexity and slowed the business down a bit which has lead competitors to steal a march.”