UK discount retailer Poundland has been acquired by Gordon Brothers, an investor specializing in distressed assets, for less than £1 (€1.17). This move comes after a series of setbacks by its Warsaw-listed parent company.

Pepco Group has confirmed the sale of the struggling retailer for a nominal consideration of €1 (85p). The Dealz chain of stores in the Republic is also owned by Pepco.

To support the business, Pepco will roll over an existing secured loan of £30 million and provide an overdraft of up to £30 million. The overdraft will be accessible upon the completion of a proposed restructuring plan, which may involve store closures and job losses among Poundland's 825 stores and 16,000 employees.

Poundland faced challenges following Pepco's decision to replace its clothing and homeware ranges with products from its European business, resulting in a 6.5% sales decline in the six months leading up to March 31. The retailer, known for selling items at a fixed price of £1, struggled against competitors like B & M, Home Bargains, Aldi, and Lidl, leading to the abandonment of the £1 price point due to rising costs and increased theft during the cost of living crisis.

Despite these challenges, Poundland will continue to be led by Barry Williams, its current managing director. Gordon Brothers, the former owner of Laura Ashley, has committed to providing up to £80 million to support the proposed restructuring and turnaround plan. The details of Poundland's restructuring plan are pending approval by England's High Court.

Pepco Group, the parent company of Pepco and Dealz brands in Europe, stated that the sale of Poundland will allow it to focus on its higher-margin clothing and general merchandise business. While Poundland has an annual sales figure of about €2 billion, it operates in a tough UK retail landscape that is becoming increasingly challenging.

Pepco's shares have seen a decline from over 56 zlotys (€12.30) in August 2021 to around 18 zlotys this year.