Retail union Usdaw has criticised Gordon Brothers for “failing to engage” and is deeply concerned that Poundland is being pushed into administration, placing some 12,000 jobs at risk. Usdaw said it persistently sought urgent talks with the owners of the discount retailer as soon as rumours started about Gordon Brothers putting the business up for sale.
Union demands engagement
Bally Auluk, Usdaw national officer, said: “With thousands of jobs on the line it is an absolute disgrace that Gordon Brothers has failed to engage with us to seek a secure future for the business.
“Sources within the company are telling me that a decision about the future of Poundland could be made as early as tomorrow and there are deep concerns that the business could go into administration, which would be a disaster for our members.
“We are aware that a management buy-out has been attempted and we are told that their offers are being turned down.
Sales growth questioned
“We found it difficult to understand why Poundland was being described as struggling, after the company recently announced they had returned to like-for-like sales growth and staff were being thanked for their ‘amazing efforts’.
“Gordon Brothers need to be open about their intentions and demonstrate their commitment to the business, which our members are successfully helping to turn around. The very least they should do is now engage with Usdaw to ensure that our members have a say in the future of their jobs.”
Restructuring and buyer search
Oliver Jackson, a partner at city law firm DMH Stallard and specialist in insolvency and business recovery, commented: “It was only just over a year ago that Poundland was bought for £1 by US investment firm, Gordon Brothers. On acquiring the business, Gordon Brothers provided the retailer with a £30m loan facility to tide it over until further funding was secured.
“One of the difficulties the new owners have had to grapple with is that Poundland’s accounts for the year to September 2024, published last year, revealed that the company had overstated their sales by £60m in the year before the sale of the business.
“Gordon Brothers has embarked on a major restructuring, involving the closure of a fifth of Poundland’s stores and the loss of over 2000 jobs.
“In August 2026 the company announced a return to profitability but it will not be out of the woods until a new investment or a new buyer is found.
“As has been reported, a management buyout was attempted but their offer was turned down and so the search remains for a third party buyer. Unless a buyer can be found then there remains a real possibility that the embattled retailer could go into administration, which would risk far greater store closures and job losses.”
Insolvency implications
Nick Stockley, partner at Mayo Wynne Baxter, said: “The ongoing weakness in the Poundland business has arisen again, however this time it looks like Poundland will not survive. Going into administration may well be beyond Poundland’s control because it is the business’ funders who have the power to take that step.
“In any event, if Poundland is insolvent, as defined in the Insolvency Act 1986, then it should be in a formal insolvency process such as administration. If Poundland continues to trade when ‘insolvent’ the directors will be acting illegally.
“The impact of administration for Poundland will be a managed shut down of the business.
“The stores will close down, the commercial leases will be terminated and employees will be made redundant. The administrators will sell on the stock that is held and the administrators may find some value in both the brand name and goodwill.
“However, suppliers will go unpaid and that may well have significant consequences in the supply chain surrounding Poundland.
“The administrators may find buyers for some of the more profitable stores, so Poundland may not entirely disappear from the high streets and some jobs may be saved. However, buyers are best served waiting for Poundland to go into administration so they can get hold of its assets and commercial premises at a cheaper rate.
“Given the previous efforts to prop Poundland up, it is very likely that the administrators will be looking to recover what they can for the unsecured creditors, but this does look like the end for Poundland as we know it.”
