Poundland suppliers fear losses as US owner faces scrutiny

Poundland, with approximately 12,000 employees and around 2,000 suppliers, filed a notice of intention to appoint administrators last Thursday, casting uncertainty over its future. Gordon Brothers, a US restructuring specialist that acquired the 600-store chain for £1 last summer, is currently in discussions with multiple potential buyers, including Martin Property Group of Northern Ireland, whose offer has the backing of Poundland’s management.

Executives from Gordon Brothers are scheduled to meet with Business Secretary Jonathan Reynolds on Wednesday, while Poundland’s management team will separately meet with Minister for the Future of Work Kate Dearden and the shop workers’ union Usdaw, reflecting growing political pressure to secure a rescue deal.

Reports suggest Gordon Brothers may prefer liquidating Poundland, selling off its inventory and individual stores to retailers like Tesco and the owner of Poundstretcher, to recoup a £30 million shareholder loan. This approach could preserve some jobs but would leave suppliers with substantial unpaid debts and unsold stock.

Karan Shah, a director of Universal Toiletries, a major supplier, stated his company faces a financial risk of approximately £1.5 million, including £700,000 in unpaid stock. “Gordon Brothers should not be permitted to maximise its own financial return at the expense of suppliers without exploring all the alternatives of a solvent deal,” he said.

Andrew Kay, chief operating officer of toy ball supplier John Leisure, anticipates needing to find alternative homes for over a million products, many manufactured specifically for Poundland. Adam Turner, sales director at confectionery supplier Highcrest Retail Brands, projects losses of “millions of pounds” due to unpaid stock.

Suppliers expressed worry that a collapse could trigger a domino effect throughout the supply chain, potentially impacting up to 30,000 jobs. Gordon Brothers has previously attributed Poundland’s challenges to rising inflation, increased staffing costs, and shoplifting.

Gordon Brothers has been contacted for comment.