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Poundland places 99p Stores into administration

Poundland has placed 99p Stores into administration, only two years after the company bought its rival for an estimated £55 million.

South African retailer Steinhoff, owner of the budget retail chain 99p Stores, has reportedly appointed AlixPartners to administrate the business, closing 60 stores across the UK with immediate effect.

“This appointment comes in support of Poundland Group Limited’s strategic decision to operate their entire retail estate under the Poundland fascia. No employees are affected by this appointment,” said a spokesperson for AlixPartners.

Job losses are thought to have been kept to a minimum as staff are set to be transferred across to neighbouring Poundland stores.

The 252 99p Store shops were bought by Poundland in 2015, ahead of the eventual takeover of Steinhof, with a plan to rebrand all outlets. However, 60 stores remained separate and were considered unprofitable by Poundland, reasoning that they were too close to existing stores.

In an interview with Retail Week, a spokesperson for the company said: “It’s no secret that the previous management of Poundland had difficulties digesting its 99p Stores acquisition.

“However, we’ve largely completed the store closure programme that addressed the remaining overlaps from that 99p acquisition.”

Poundland’s accounts for the year to March 27 2016 show pre-tax profits fell 19 per cent to £35 million, with profits falling at pre-existing Poundland stores and the rebranded 99p Stores branches incurring a pre-tax loss.

In July 2016 Steinhof announced that it had agreed a £450 million deal to take full control of Poundland, its first successful bid to take full control of a European company after failing to acquire Argos owner Home Retail Group and French retailer Darty.