Poundworld is set to crash into administration today putting 5,100 jobs at risk after last-ditch rescue talks break down

• e-mail

Poundworld is set to become the latest retail casualty on the British high street as it calls in administrators, putting 5,100 jobs at risk.

The budget retailer is poised to appoint Deloitte to handle an administration after last-ditch rescue talks with R Capital broke down over the weekend.

Poundworld, which is owned by TPG Capital, has around 350 stores. Its possible collapse comes after both Toys R Us and Maplin fell into administration earlier this year.

Poundworld has about 350 stores in the UK, including this one pictured in Stockport today

Other parties named as possible buyers were turnaround specialist Alteri Investors and Poundworld's founder Chris Edwards. But a deal could not be struck.

Poundworld's losses widened in 2016-17 to £17.1 million, from £5.4 million of losses the year before.

Poundworld will continue to trade while a buyer for all or part of the business is sought, Deloitte said, adding that there are no redundancies or store closures at this time.

Clare Boardman, joint administrator at Deloitte, 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. 

The store's losses widened in 2016-17. Pictured: A woman walks into a Stockport branch today

'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.'

How Poundworld turned a market stall trader into a millionaire

A former Yorkshire market stall trader turned himself into a millionaire thanks to the growth of Poundworld.

Christopher Edwards, who started the retailer on a stall in Wakefield in 1974, and his son pocketed more than £75million when they sold a majority stake in the budget retail chain.

Poundworld founder Chris Edwards

The chain, whose first outlet opened in 2004, was sold to US private equity firm TPG for £150million in 2015, marking a huge rise for Mr Edwards.

In 2015 Poundworld revealed record annual sales and profits alongside plans to continue its rapid expansion by opening 60 new stores in 2016.

That year the major competitor to Poundland said sales jumped 22 per cent to £422.3million to the year finishing end of March.

Over the period it opened 38 stores, with like-for-like sales up 5.6 per cent. The group added that operating profits also hit a record, more than doubling by 130 per cent to £14.6million.

Poundworld, based in Normanton, West Yorkshire, was also known for becoming the first single-priced UK retailer to offer online shopping.

But its downfall in recent months comes after several retailers have shown significant financial distress this year, with both Maplin and Toys R Us disappearing from the high street.

Last week, Mr Edwards was said to have been considering putting forward a rescue package to prevent Poundworld's collapse.

Advertisement

A TPG spokesman said: 'This was a difficult decision for every party involved. We invested in Poundworld because of our belief in how the company serves its customers and the strength of its employees.

'Despite investing resources to strengthen the business, the decline in UK retail and changing consumer behaviour affected Poundworld significantly.' 

The retailer's move would come just days after House of Fraser detailed its plans to shut 31 stores, affecting around 6,000 jobs.

House of Fraser is seeking landlord approval for the restructuring plan, which is a form of insolvency known as a Company Voluntary Agreement (CVA).

A raft of CVAs have been struck in recent months as retailers struggle amid surging costs, rising business rates, competition from online rivals and a slowdown in consumer spending.

Other retailers undertaking CVAs in a bid to keep trading include New Look, Mothercare and Carpetright.

Restaurant businesses have also been seeking to cut their costs with store closure programmes, with Carluccio's, Byron and Prezzo all pushing through CVAs this year. 

Poundworld, which is based in Normanton, West Yorkshire, was formed in 2004 but is said to trace its origins back to a market stall in nearby Wakefield in 1974. 

Martin Lane, managing editor of money.co.uk, said: 'All 5,000 employees of Poundworld are in for an anxious wait as they expect to learn if they'll suffer the same fate as many of their retail comrades such as Maplin and Toys R Us.

'All eyes have been on the retailer since they announced talks with a potential buyer, but now these have fallen through the risk to jobs is sadly much higher.

'It is undoubtedly distressing news for employees of Poundworld and their families especially because their fates have been kept in limbo.' 

* Would you be affected by any potential Poundworld job losses or store closures? Please email: mark.duell@mailonline.co.uk * 

Britain's ailing high street: Retailers struggling to compete with online rivals

The news of Poundworld's demise comes amid turmoil on the high street, with multiple retailers falling into administration or announcing restructuring plans since the start of the year.

Experts say that a combination of online competitors, increasing business rates and rising import prices are leaving high street giants who have traditionally been seen as untouchable struggling to survive.

Here MailOnline looks at the changes high street retailers have recently made:

- House of Fraser: Last week it emerged House of Fraser is to all but disappear from traditional high streets after announcing the closure of half its shops - putting at risk 6,000 jobs. The 169-year-old chain has pledged to axe 31 stores, including its Oxford Street flagship, in a bid to satisfy creditors and stave off collapse.

House of Frase announced the closure of half its shops - putting at risk 6,000 jobs

- Marks & Spencer: Late last month, the high street stalwart reported a 62.1% fall in pre-tax profit to £66.8 million in the year to March 31 as it was dragged down by £321.1 million in costs linked to store closures. The results came a day after M&S said it will shut more than 100 outlets by 2022 as it accelerates a transformation programme that will see thousands of jobs put at risk.

- Toys R Us: The toy chain went into administration on the last day of February after failing to find a third-party buyer. In February, HMRC sought to recover £15 million in unpaid VAT and this finally tipped the company into administration.

- Maplin: One of the UK's biggest electronics retailers collapsed into administration on the same day as Toys R Us after talks with buyers failed to secure a sale. The business faced the slump in the pound after the Brexit vote, weak consumer confidence and a withdrawal of credit insurance.

- Conviviality Retailing: The major drinks and off-licence supplier that owns Wine Rack and Bargain Booze went into administration in early April. The company had grown too quickly by merger, there were a series of profit warnings and a £30 million tax bill for which Conviviality was forced to ask for extra funds from investors - who refused.

- Warren Evans: The bed, mattress and furniture retailers in London and the South East went into administration one week after putting itself up for sale. The retailer, known for its ethical stance, had been losing money for some time under the pressure of rising costs and shrinking customer spending.

Toys R Us went into administration in February after failing to find a third-party buyer

- Calvetron : The owner of Jacques Vert, Windsmoor, Dash and Eastex fashion brands that ran about 300 UK concessions in stores including Debenhams and House of Fraser, went into administration at the start of May. Bosses said inflation and wage freezes had been a driving force behind decreased spending.

- Juice Corporation : The firm behind fashion brand Joe Bloggs and the retailer that designed the wedding dress for Diana, Princess of Wales, collapsed into administration in January. Although the group made profits, it had failed to make inroads into the fashion market.

- Mothercare : The ailing baby goods and maternity retailer has proposed to close 50 stores as part of a planned turnaround for the company. It said losses were driven by the costs of 17 store closures last year, onerous leases and a head office restructure which resulted in 190 job cuts.

- Carpetright : The embattled flooring firm is embarking on a store closure programme and has begun efforts to raise £60 million in emergency funding as it pushes through a restructuring after announcing it was expecting to book a full-year underlying pre-tax loss of between £7 million and £9 million.

- Carluccio's : The upmarket deli chain has unveiled a restructuring plan that will likely lead to 34 restaurant closures as it cited a combination of a gradual decline in consumer spending and increasing competition, coupled with the rising costs of labour, raw materials, rent and business rates.

Other restaurants that have undertaken company voluntary arrangements so far this year include Byron , Prezzo and Jamie's Italian .

- New Look : The clothing chain announced earlier this year that it would close 60 UK stores and cut 1,000 jobs as part of a financial restructuring.