Poundland is poised for a sweeping restructuring after investment firm Gordon Brothers acquired the struggling British discount retailer from parent company Pepco Group.
The deal, announced on Thursday, includes up to £80 million ($108.5 million) in financial support to stabilise the chain and reverse its decline.
The transaction is part of a strategic overhaul by Pepco Group to streamline operations and focus on its higher-margin Pepco brand in continental Europe.
The company said the move would improve profitability, drive stronger cash generation and simplify its brand portfolio.
Gordon Brothers, known for acquiring and restructuring distressed assets, will work alongside Pepco and Poundland to implement a comprehensive recovery plan.
As part of the arrangement, Pepco is expected to retain a minority investment interest in Poundland, subject to the success of the proposed turnaround.
Poundland has been a drag on Pepco Group’s performance
Poundland has emerged as a weak link in Pepco Group’s portfolio in recent quarters.
For the six months ending March 31, revenues at Poundland dropped by 6.5% to £830 million.
The retailer reported “challenges across all categories” and closed 18 stores net over the period.
Pepco warned that Poundland may not turn a profit in the 2024–25 financial year, prompting the decision to divest.
Like-for-like sales for the group fell by 0.7%, despite total revenues rising 4.3% to €3.34 billion (£2.82 billion).
Analysts said the underperformance at Poundland contributed heavily to the group missing earnings expectations, with underlying EBITDA coming in 8% below consensus.
“At Poundland, trading remains challenging, which is reflected in a profit outturn below expectations for H1 and a weaker outlook for the full year,” said Pepco Group CEO Stephan Borchert.
This transaction will strongly support our accelerated value creation programme by simplifying the group and focusing on our successful Pepco business.
Poundland store closures begin amid rescue plan
The acquisition by Gordon Brothers is expected to lead to widespread store closures across the UK.
Up to 200 of Poundland’s 800 outlets could be shuttered as part of the restructuring, according to earlier reports.
The Telegraph had flagged that 150 to 200 stores were being considered for immediate closure during the sales process.
Already, the retailer has seen eight closures since the start of May, with another four scheduled later this month.
The Surrey Quays branch will shut on June 11, followed by Barrow in Furness on June 12, Bristol on June 20 and Flint on June 21.
Since March 2024, at least 20 stores have ceased operations.
Barry Williams, who was reappointed as Poundland managing director in March 2025, is leading the recovery effort, with a renewed focus on core discount offerings.
The brand is expected to deliver earnings of between €0 and €20 million (£16.9 million), down from previous guidance of €50 million to €70 million.
Exit follows wider Pepco brand shift
Pepco first announced its intention to separate Poundland in March 2025, citing a strategic realignment around the core Pepco brand.
At the time, the company said it would consider all options for the business, including a sale, as it shifted focus toward its profitable clothing and general merchandise ranges in continental Europe.
The company also hinted at a possible separation of Dealz Poland over the medium term, further simplifying its structure.
The deal with Gordon Brothers is aligned with Pepco’s ambition to operate under a single, streamlined format and exit non-core, lower-margin businesses.
“This is consistent with our ambition to simplify the group and concentrate on profitable growth,” Borchert said.
The disposal of Poundland, which contributed 33% to group revenue but just 5% of earnings in fiscal 2024, is now on track to complete before the end of the financial year in September.
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