UK discount retailer Poundstretcher is facing the prospect of cuts to its store base as its owner considers a court-backed restructuring, in another sign of the pressures bearing down on UK high streets.
According to Sky News, owner Fortress Investment Group is drawing up a restructuring plan with advisers. Such a plan is a formal process that needs court approval and must be signed off by creditors.
Fortress acquired the discount chain two years ago.
Retail figures cited by Sky News said market talk suggests the plan could be initiated within days and may involve seeking rent reductions from several landlords.
Fortress was approached for comment, but had not responded at the time of publication.
Poundstretcher had close to 320 stores around 18 months ago, although the current estate is believed to have changed since then.
The business employed 4,000 people when it was acquired from Aziz Tayub.
If the restructuring proceeds, it would follow a series of recent measures taken by UK retailers attempting to stabilise their finances.
Claire’s and The Original Factory Shop were both placed into administration earlier this year by Modella Capital.
While there has been hope that many of their stores could be sold, no confirmed transactions have yet been announced. Modella also owns TG Jones, the long-established high street retailer previously known as WH Smith.
Earlier this month, The Daily Telegraph said advisory company Teneo had been brought in to develop a plan for TG Jones that could include around 80 store closures.
Retail sources told Sky News they anticipate Teneo will also be involved in any restructuring work at Poundstretcher.
Sky News has separately reported that Fortress is lining up Rothschild to advise on a sale process for Majestic Wine, although that is not expected to start for another year.
Fortress’s UK consumer exposure also includes Punch Pubs and bar operator Loungers. Poundstretcher is among value retailers finding it difficult to navigate inflation-driven cost pressures.
Rival Poundland shut many stores last year and pursued rent reductions with landlords as it sought to maintain its position on the high street.
Established in 1981, Poundstretcher sells a mix of goods, including food, toiletries, garden items and homewares.
The discount retail segment expanded quickly in recent years, benefiting from demand among shoppers trying to manage tighter household budgets.
The British Retail Consortium has recently cautioned that higher costs of employing shop workers are likely to feed through into job losses in the sector.
