Poundland is preparing to draw on emergency funding after a disappointing Christmas trading period intensified concerns over the discount retailer’s recovery.
The chain is set to tap a £30m overdraft facility provided by its former owner, Pepco, after festive footfall and sales fell short of expectations. The move follows a tough few months for the retailer, which was rescued in the summer by distressed investment specialist Gordon Brothers in a court-approved restructuring deal.
Gordon Brothers acquired Poundland for a nominal £1, a transaction that safeguarded the majority of its 16,000 jobs across 825 UK stores but also paved the way for widespread closures. Under the terms of the deal, Pepco agreed to provide financial support, including an immediate £30m loan and a further £30m credit facility in the form of an overdraft.
Since taking control, Gordon Brothers has closed two warehouses and shut 68 of Poundland’s worst-performing stores, putting more than 2,000 roles at risk, as it attempts to stabilise the business and return it to profitability.
However, trading conditions deteriorated further over the Christmas period. Data from Sensormatic shows that UK high street footfall was down 13 per cent year-on-year on December 23, typically one of the busiest shopping days of the calendar. Retailers are also bracing for a weak start to 2026, with the Confederation of British Industry reporting that sales expectations are now at their lowest level since March 2021.
Against this backdrop, Gordon Brothers informed Pepco in recent weeks that it intended to access the overdraft facility after revenues fell below forecast, creating a short-term liquidity squeeze. Poundland plans to draw down the funding in two stages, with an initial tranche in January and further access later in the year.
Pepco is understood to have initially resisted the request, fuelling fresh questions over Poundland’s longer-term prospects, but agreement was ultimately reached at board level, easing immediate concerns over the retailer’s cash position.
A team of advisers is closely monitoring the turnaround. Gordon Brothers has brought in forensic accountants from AlixPartners to oversee cash flow, while Poundland’s board has appointed FRP Advisory as specialist corporate finance advisers.
Under the restructuring plan, Poundland is expected to close around 130 stores by February next year. Clearance sales are already under way in locations earmarked for closure, with discounts of up to 40 per cent.
Earlier this week, the retailer confirmed it would remain closed on Christmas Day, Boxing Day and New Year’s Day, continuing a policy aimed at prioritising staff wellbeing.
A Poundland spokesperson said the restructuring had provided sufficient financial headroom to implement recovery plans and stressed that the business continued to receive full backing from both Gordon Brothers and Pepco. “While there remains much to do, we are pleased with the progress made in recent months as we work to get the business back on track,” the spokesperson said.
Pepco declined to comment.
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Poundland turns to emergency overdraft after Christmas trading slump