Struggling discount retailer Poundstretcher has today launched its proposals for a company voluntary arrangement, which is set to affect landlords at more than 337 stores in the UK.
Under its proposals, 253 of its circa 450 stores in the UK will see rents paid in full for six weeks, after which trading will “depend on the commercial merits of each store with the relevant landlords’ collaboration”.
A further 84 stores will trade with rent cuts of around 30-40% for a period of three years. Leases would be retained at current rents at 94 stores.
The retail chain also occupies a further 23 stores under leases where the tenant is a connected company, Poundstretcher Properties Limited. The retailer’s directors plan to place this company into administration before the decision date on the CVA.
The retailer, which employs more than 5,500 people, has drafted in KPMG to advise on the CVA. Creditors will have until 2 July to vote on the proposals.
KPMG said the process forms part of a wider restructuring in a bid to stem losses from underperforming stores, realign head office costs and pave “the way for investment in the business’s core estate and product offering”.
Will Wright, of KPMG, said: “One of the UK’s best-known discount retailers, Poundstretcher has suffered from significant impacts to profitability on several fronts over a sustained period, which were then further exacerbated by the impact of Covid-19 on footfall.
“With the directors of the business having explored a number of options, this CVA seeks to safeguard the long-term future of the business across a smaller, more sustainable store estate.”
Poundstretcher also operates a distribution centre in Leicester.
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