// Poundstretcher launches CVA proposal to help turnaround the business
// No job cuts or store closures are outlined, but there will be a push for rent cuts across most of its store estate
// KPMG has been lined up to handle the CVA
Poundstretcher has launched a CVA proposal that features significant rent cuts as the discount retailer embarks on a major restructuring scheme.
Poundstretcher said the CVA forms part of a wider turnaround plan which seeks to restructure its UK store portfolio, stem losses from underperforming outlets, realign head office costs and pave the way for investment in the retailer’s core estate and product offering.
Will Wright and David Costley-Wood from KPMG are the proposed nominees of the CVA.
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While no store closures and job cuts have been specified as part of the proposed CVA, Poundstretcher said it wanted to focus on slashing rent costs across its 450-strong store estate.
The retailer proposed that total of 94 stores would continue to pay the same rent, while 84 stores would see reductions of between 30 per cent and 40 per cent over three years.
The remaining 253 stores will pay six weeks full rent before adopting them based on each store’s “commercial merits”.
Poundstretcher also occupies a further 23 stores under leases where the tenant is a connected company, Poundstretcher Properties Limited.
It is the directors’ intention to place this company into administration prior to the decision date of the CVA.
“One of the UK’s best-known discount retailers, Poundstretcher has suffered from significant impacts to profitability on several fronts over a sustained period, which were then further exacerbated by the impact of Covid-19 on footfall,” Wright said.
“With the directors of the business having explored a number of options, this CVA seeks to safeguard the long-term future of the business, across a smaller, more sustainable store estate.”
Poundstretcher needs 75 per cent creditor approval for the CVA to proceed with a vote on the proposal to be taken on July 2.
The retailer directly employs in excess of 5500 people in its store network, Leicester warehouse and head office.