Poundland has hit back at reports that it is struggling to keep its shelves stocked after several major suppliers tightened credit lines and payment windows amid uncertainty over the discounter’s future following its sale to investment firm Gordon Brothers last month.
Its new owners proposed restructuring plan: closing 2 DCs, at least 68 of its nearly 800 stores, seeking rent reductions on other sites, planning to stop selling frozen food and reduce its chilled food offer.
On Thursday, Pepco Group revealed Poundland revenues down 10.3% to €347m (-7.1% like-for-like) during the quarter to 30 June.
A report by The Times suggested that Poundland’s current situation has spooked suppliers. Sources close to the situation told the newspaper that several major consumer goods companies have cut their payment windows for the retailer, leading to empty shelves in some stores.
Gordon Brothers is currently seeking court approval for its restructuring plan. At a convening hearing on Tuesday, a judge approved the classification of creditors under the plan. A final ruling is expected by the end of August.
The Times said that although suppliers are not formally part of the court-led restructuring process, Poundland has started briefing them on its recovery plans. A supplier meeting was held on Wednesday at its head office in Walsall.
A spokesperson for Poundland is quoted as saying: “Our expectation is that any credit limitations for suppliers will unwind in time after we have the opportunity to implement the restructuring and recovery plan we shared last month. We have been briefing suppliers this week about those plans and appreciate the support they’re providing.”
Poundland has since tried to play down The Times report. A spokesperson told trade publication The Grocer that P&G had never placed any restrictions on the chain’s supply and Nestlé had actually increased its limits on Wednesday this week, when the retailer held the supplier meeting.
They said Poundland received “very strong support” for its recovery plans when it briefed hundreds of suppliers at the gathering. “It’s very firmly business as usual despite the restructure plans,” they stressed.
NamNews Implications:
- Poundland is ‘cutting to fit’ profitable demand…
- …as any responsible business would do.
- Likewise, cautious suppliers will attempt to reduce their exposure to perceived risk.
- This means that Poundland will need to adjust to a new supplier-Poundland mix…
- …that will allow the retailer to proceed to the next stage of its recovery.
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