Poundstretcher wants restructuring plan which might see rents slashed at 300 shops to keep away from administration

Poundstretcher will ‘likely have no choice’ but to file for administration if a restructuring plan is not given the green light, a court has been told.

The budget retailer’s lawyers said the group had been struggling in the face of weak consumer confidence and inflationary pressures.

It is waiting for final legal approval for its plan to ask landlords to slash rents across its 300 shops.

The group received one stage of approval after a hearing today but now is waiting for a final response on 4 June.

The business insisted it has no plans to axe any jobs in its 3,000-strong workforce or shut any shops, if the plan is approved.

The discount retailer was bought by US investment firm Fortress, which also owns Majestic Wine, in 2024 for an undisclosed sum.

Business woes: Poundstretcher has grappled with higher costs and consumers spending less, its lawyer said

Representing the business, Tom Smith KC told the court that since 2020 the retailer’s trading has ‘continued to deteriorate due to subdued customer confidence, rising operating costs and inflationary pressures’.

And the court was also told that if a restructuring plan was not approved, it would have ‘insufficient funds’ to meet its funding need of £2.8million which is due at the end of June. June 28.

This amount would increase to £9.7million in the week commencing July 26.

In written submissions, Smith KC added: ‘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…’

This raises fresh fears of further job losses on the High Street following news that hundreds of jobs are at risk at rebranded WH Smith shops, TG Jones, this week.

The high-street arm of WH Smith was bought last year by private equity firm Modella for £40million, and rebranded as TG Jones. 

TG Jones is set to close up to 150 of its 480 stores and told its staff to expect redundancies. TG Jones employs 5,000 people.

A spokesperson for Poundstretcher 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.’

The group was founded in 1981 by Paul Appell and Stephen Fearnley and is based in Kirby Muxloe, Leicestershire.