Poundworld to start closing down sales as administrators continue search for buyer

Follows news of 100 job cuts at retailer's head office earlier this week

The discounter has brought in the new owners of Homebase to run the sales (REUTERS)

Poundworld stores are to begin closing down sales as administrators continue to seek a buyer for the chain.

The discounter went into administration earlier this month, putting more than 5,000 jobs at risk across the UK, after rescue talks broke down. Its owner, TPG Capital, had hoped to bring Rcapital on board for a rescue deal.

Deloitte was appointed as administrator, and the audit firm said Poundworld would continue to trade while a buyer for all or part of the business is sought.

However, on Tuesday, it emerged that 100 jobs had been axed at the company’s head office in Normanton, Yorkshire, and on Wednesday the group sent a note to staff informing them that ‘closing down’ sales would begin. Restructuring firm Hilco has been drafted in to facilitate the process.

“"It has been decided that stores are to commence 'closing down' sales. For clarity, this does not mean that store will definitely close,” the note read.

"The administrators' strategy remains the same; to continue to trade the business in order to realise the stock whilst seeking to secure a sales of the business, either in whole or part.

"Please be assured that the Hilco team are very experienced retail consultants who, in many cases, have been through this process themselves."

Hilco agreed to buy Homebase from Australian conglomerate Wesfarmers earlier this year. ​

Deloitte said a combination of “high product cost inflation, decreasing footfall, weaker consumer confidence and an increasingly competitive discount retail market” was the reason behind Poundworld’s collapse into administration.

Poundworld is one of many British retailers to fall victim to tough trading conditions this year.

Earlier this month, Marks & Spencer said it would close more than 100 stores by 2022, while House of Fraser announced that it would shut 31 of its 59 branches, because the cost of running its store network had become “unsustainable”. Mothercare also recently said it would close 50 stores.

Meanwhile, both Maplin and Toys R Us have collapsed into administration since the beginning of the year.

Additional reporting by newswires