Variety discounter Poundstretcher has undertaken a review of its finances which reveals it may need to close half of its stores, according to The Grocer.
Store closures and potential CVA agreement
Poundstretcher has already closed 30 stores since lockdown began, mainly as a result of expiring leases. This brings its estate to 420 stores.
The retailer has reportedly drawn up plans for a CVA agreement that looks to secure lower rents at 84 sites, and may result in the closure of half its estate. The CVA proposals are being supervised by KPMG.
Continuous challenges in performance
The retailer has been through a period of struggle leading up to this announcement. It reported mixed results for FY18/19 with a large growth in turnover (12%) but sharp decline in profit (-111%). It has also dealt with multiple changes in management, seeing three different COO's since 2018.
Poundstretcher is operating in a very competitive environment with other variety discounters B&M and Home Bargains rapidly expanding and seeing strong results. B&M recently announced 16.5% revenue growth in its latest annual results, with like-for-like sales of +3.3%. Poundstretcher has looked for ways to rejuvenate its business, through switching to the Bargain Buys banner, but has still struggled to differentiate itself from the bigger players.
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