Multi-priced retailing couldn’t save Poundworld from administrators

Not even multi-priced retailing was enough to save Poundworld from the administrators, according the data and analytics company, GlobalData.

Yesterday it was revealed that having faced several headwinds including strong competition and inflation, the retailer had appointed administrators to enter its next phase.

IN the year ending March 31, 2017, the discounter reported an operating loss for the first time in its history of £6.2 million. It’s not the only discounter facing such problems.

Insurers withdrew credit from The Original Factory Shop this month after falling profits and plans to close a large portion of its store estate, while Poundstretcher announced a fall of 7.5 per cent in its full-year sales to March 2017.

However, there are a number of examples of discounters still thriving in what has become a gloomy-looking year for high street retailers. “Primary rival Poundland, with 7.5 per cent share of the discount market – three times more than Poundworld – is performing well,” said Emily Stella, lead analyst at GlobalData.

“The market leading ‘pound’ store stormed the media recently with its outrageous marketing campaigns, which have kept customers entertained and engaged with the brand. The rival discounter has also benefitted from greater buying power after its acquisition of 99p stores in 2015, helping the discounter keep costs down.

“As multi-priced discounters such as B&M Stores and Home Bargains expand rapidly – B&M Stores alone has gained 4.5 percentage points or market share in the last five years – the historic ‘pound’ stores could find it difficult to keep up.”

In a new move, however, Poundworld’s founder, Christopher Edwards has said he is considering buying back some of the retailer’s stores.

Edwards sold the business in 2015 for £150 million to TPG Captial, but said the chain could be saved with fresh management.

He said that no deal had been finalised and the discounter would only survive another two weeks without a buyer, putting some 5,100 jobs at risk. 

About Robert Hutchins

Robert Hutchins is the editor of ToyNews and its sister title, Licensing.biz. He has worked his way from Staff Writer to Editor across the two titles, having spent almost eight years with both and what now seems like a lifetime surrounded by toys. You can contact him by emailing robert.hutchins@biz-media.co.uk or calling him on 0203 143 8780 You can even follow him on Twitter @RobGHutchins if ranting is your thing...

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