Major high street retailer with 300 stores could plunge into administration

Poundstretcher will "likely have no choice" but to file for administration if a restructuring plan is not approved, the High Court has heard. The discount retailer, which operates nearly 300 stores and employs 3,000 staff nationwide , was acquired by US investment firm Fortress, which also owns Majestic Wine, in 2024 for an undisclosed sum. In March, the company unveiled proposals to request landlords reduce rents across its store portfolio as it sought to safeguard its long-term future, though it stressed there would be no shop closures or redundancies. At a hearing on Wednesday, legal representatives for the company stated that without approval of a restructuring plan, it would have "insufficient funds" to meet its funding requirement of £2.8 million, which falls due in the week beginning June 28. This figure would rise to £9.7 million in the week commencing July 26. In written submissions, Tom Smith KC, for Poundstretcher, said: "In those circumstances, the directors of the plan company will likely have no choice but to file for administration. "In the administration, the administrators are anticipated to continue trading for a limited period while available liquidity is used to support a sale of the stock." He stated that the objective of the restructuring plan was to restore Poundstretcher to "financial stability" and to enable them to "implement the turnaround business plan". The London hearing was what is referred to as a "convening hearing", where barristers seek a judge's approval to arrange meetings between a company's creditors to cast their votes on the restructuring plan. Mr Smith also informed the court that since 2020, "the group's performance has continued to deteriorate due to subdued customer confidence, rising operating costs and inflationary pressures". He said: "In light of its financial difficulties, the plan company has prepared the turnaround business plan, alongside Teneo, whom the plan company engaged as financial advisors, with the aim of avoiding administration and restoring the group to profitability." Mr Smith stated that this entailed "shifting the product mix of the plan company to include more well-known household brands" and "optimising the plan company's store portfolio, by opening stores on a selective basis in locations with higher footfall". The company’s barrister said Poundstretcher’s financial position as it stands is “poor and unprofitable”, and if it did enter administration rather than a restructuring, it would likely be liquidated immediately. In his ruling, Mr Justice Hildyard declared he was "content" that the matter should proceed to the meetings with the creditors on May 26. Should creditors vote in favour of the scheme, the plan is expected to return to the High Court to be rubber-stamped by a judge at a "sanction hearing" pencilled in for June 4. A Poundstretcher spokesperson said: "We welcome today's court decision that allows our plan to proceed. Our plan is focused on strengthening Poundstretcher's long-term position and creating a company that can grow in the years ahead. "There are no planned store closures or redundancies and our stores continue to welcome customers throughout this process. Our priority remains serving customers across the UK."