The discount retail chain Poundland has been acquired by investment company Gordon Brothers for a mere £1, leading to expectations of numerous store closures.

Poundland, which operates over 800 stores in the UK and has approximately 16,000 employees, was put up for sale by its owners, Pepco Group, due to challenging trading conditions earlier this year.

Gordon Brothers, previously the owner of Laura Ashley, has committed to investing up to £80m in Poundland to facilitate a turnaround of the business.

As part of the acquisition, Poundland is set to undergo a restructuring plan that will likely involve closing several stores, putting thousands of jobs at risk. The company is also looking to reduce its rent expenses, with specific details to be announced in the future.

Pepco, based in Poland, acquired Poundland in 2016 and has been exploring options for the chain since late last year to focus on its more profitable Pepco brand. Poundland has faced stiff competition from other discount retailers and rising wage costs.

Stephan Borchert, CEO of Pepco Group, stated that the sale represents a significant step in their strategic plan to shift focus from FMCG to Pepco, a higher-margin clothing and general merchandise business.

Despite interest from other parties like Hilco and Modella Capital, Pepco clarified that the sale of Poundland would not generate substantial returns for investors due to the chain's lack of profitability in the previous financial year.

Discount retailers like Poundland have been struggling amid intensifying competition from supermarkets and other discount chains, coupled with slowing sales growth and increased costs like national insurance contributions.

Poundland, which originally gained popularity in 1990 for offering £1 products across various categories, transitioned away from this model in 2019 but has recently reintroduced more £1 items in an effort to attract customers.