Poundworld enters administration putting more than 5,000 jobs at risk
The high street chain has nine stores across the Black Country and Staffordshire.
Poundworld crashed into administration today after last-ditch sales talks broke down, putting 5,100 jobs at risk.
The high street retailer becomes the latest to hit trouble following the likes of Maplin and Toys R Us.
House of Fraser last week confirmed plans to close up to half of its shops including its flagship Beatties department store in Wolverhampton.
Poundworld has branches at Bloxwich, Merry Hill shopping centre in Brierley Hill, Hednesford, Lichfield, on the Reedswood Retail Park in Walsall, in Stafford and West Bromwich and two in Wolverhampton.
A large shop in Walsall’s Park Place Shopping Centre was closed in March.
Poundworld will continue to trade while a buyer for all or part of the business is sought.
There are no redundancies or store closures at this time.
Daniel Butters and Clare Boardman, restructuring partners at Deloitte, have been appointed as joint administrators to Poundworld Retail.
Clare Boardman said: “The retail trading environment in the UK remains extremely challenging and Poundworld has been seeking to address this through a restructure of its business.
"Unfortunately, this has not been possible.
"We still believe a buyer can be found for the business or at least part of it and we are keeping staff appraised of developments as they happen.
"We thank all employees for their support at this difficult time.”
Like many high street retailers, Poundworld has suffered from high product cost inflation, decreasing customers, weaker consumer confidence and an increasingly competitive discount retail market.
The budget retailer was in talks with private equity firm R Capital over the weekend, but called in administrators at Deloitte after talks broke down.
Poundworld offers around 8,000 product lines mostly priced at £1, including groceries, toiletries, household cleaning and confectionery items.
The business operates from 335 stores across the UK and its head office and distribution centre in Normanton, near Wakefield in West Yorkshire.
It is understood that Poundworld's owner, TPG Capital, rejected previous offers to buy the business out of a pre-pack administration.
Poundworld’s losses widened in 2016-17 to £17.1 million, from £5.4m of losses the year before.
The retailer was hit with a £5.7 million charge for onerous leases, a provision retailers make when the cost of a lease is no longer covered by the income of the store.
Several retailers have shown significant financial distress this year, with both Maplin and Toys R Us disappearing from the high street.
In addition, Carpetright, Mothercare and New Look have all undertaken sweeping store closure programmes, while House of Fraser is putting together a rescue plan called a company voluntary arrangement, or CVA, which is expected to result in at least 20 of its 59 department stores shutting.
Restaurant groups including Carluccio’s, Prezzo and Byron have also been shutting dozens of branches as they are squeezed by rising costs and a fall in consumer spending.