The owner of Poundland has said it is considering a possible sale of the UK budget retailer after warning of “more difficult” trading conditions as costs surge.
Pepco Group is examining “all strategic options” to potentially separate Poundland, which has 850 stores, from the wider group. It comes after Pepco warned underlying earnings will come in at between 50 million euros and 70 million euros (£41.9 million and £58.6 million) as sales remained in negative territory over January and February.
It blamed a “challenging” UK retail landscape, along with tax changes announced in the Budget. The rate of National Insurance paid by firms will rise from 13.8% to 15% from April 2025. The earnings threshold for when employers start paying National Insurance will also be lowered from £9,100 per year to £5,000.
At the same time, minimum wage will rise by 6.7%. For someone aged 21 and over, minimum wage will rise from £11.44 an hour to £12.21 an hour, while those aged 18 to 20 will see their rate rise from £8.60 an hour to £10 an hour. If you’re under 18 or you’re an apprentice, minimum wage is rising from £6.40 an hour to £7.55 an hour.
Pepco said: “Poundland is a strong brand that serves millions of customers every week and had around two billion euros (£1.67 billion) in annual turnover in financial year 2024, but it is also operating in an increasingly challenging UK retail landscape that is only intensifying.
“From April 2025, the UK Government’s additional tax changes announced in the Budget will also add further pressure to Poundland’s cost base. Therefore the board is actively evaluating all strategic options to separate Poundland from group during financial year 2025, including a potential sale.”
Pepco will also look at options to offload the Dealz business in Poland further down the line, but will continue to manage the chain for now, while it confirmed it is reviewing its Pepco chain in Germany. Pepco said former Poundland managing director Barry Williams, who took over as managing director of Pepco in September 2023, will also return to his former role at Poundland ahead of a possible sale.
Stephan Borchert, chief executive of Pepco Group, said: “The board and I are actively exploring separation options for Poundland, including a potential sale, from the group, with consideration also given to the separation of the well-performing Dealz Poland over the medium term.
“Barry Williams did a great job as managing director of Pepco, returning it to like-for-like sales growth, and I am confident he will play a pivotal role in getting Poundland back on track, given his previous success there.”
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