Poundstretcher rules out takeover claims

Poundstretcher's owners have held talks with potential buyers – but are not searching for a white knight to save them, despite some press reports.

 
Management at the Leicestershire business said private equity investor Endless had approached them to look at a potential partnership.
 
 
However, the Poundstretcher team said it was just one of many inquiries that occasionally come up about the business - and came to nothing.
 
The budget retailer has its headquarters in Kirby Muxloe and is controlled by the Crown Crest group, owned by Aziz Tayub and his family.
 
Crown Crest finance director Hemant Patel said despite increased competition in the discount store sector, the business was doing well and was not up for sale – unless the right offer happened to come along.
 
He said: Although we can confirm that we have had informal talks with Endless, this was following a direct approach from them a few months ago.
 
Endless have substantial funds to invest in the retail sector where they already own a number of businesses and saw Poundstretcher as a very exciting prospect.
 
Mr Patel said Poundstretcher had substantial cash and bank balances, with net assets of around £118 million.
 
He said latest accounts being filed would show it made a pre-tax profit of just over £3.5 million in the year to March 31 – up from £2.4 million – and was spending money refitting 100 of its 390 stores.
 
Turnover, he said, was down at £400 million, from £429 million in 2016. It was more than £470 million a year before that.
 
To combat the drop in sales, the business is planning to open a further 60 stores in the next 12 months – many replacing less successful town centre shops with out-of-town operations
 
On top of that, he said the business had also spent around £25 million buying the freeholds to some of its stores over the past three years.
 
It has about 6,500 staff nationally – including at five Leicestershire stores – and 120 at its headquarters.
 
Mr Patel said: We are a national retailer and get approached maybe one or two times a year. Some we dismiss because we know nothing will come of them.
 
We are a target, and people do want to invest in the UK and in retail.
 
We have not gone out there and put the company up for sale.
 
He said Poundstretcher was facing growing competition from other multi-price discounters such as B&M and Home Bargains and pound stores such as Poundworld and Poundland.
 
He said: The marketplace is tough – competition is the major thing.
 
You have to remember that the marketplace is a little bit more mixed now with the rise of Aldi and Lidl which has affected the major supermarkets.
 
The big four supermarkets have had to regear themselves and be more competitive on their branded products - that affects the discount sector.
 
Our turnover has gone down slightly, but over the last year we have tried to increase our margins and are sourcing better.
 
Endless recently bought 72 stores in the Hinckley based Jones Bootmaker group, securing about 840 UK jobs – including those at the store in Highcross, Leicester.
 
But 25 underperforming stores and six concessions closed with the loss of 262 jobs.
 
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