Key Takeaways
- • Gordon Brothers, the US owner that bought Poundland for a symbolic £1 last year, has withheld £50m needed for new stock and wages, with about 600 stores and roughly 12,000 jobs at risk according to the column.
- • Poundland reported an £18.1m operating profit in the year to September, yet Gordon Brothers has rejected offers, including one from Martin Property Group, and stands to gain more by breaking the business up.
- • As owner and creditor holding about £30m of debt, Gordon Brothers ranks first for repayment in administration ahead of staff owed wages, and redundancy costs would fall on taxpayers if funds run out.
- • Liam Byrne, chair of the Commons business and trade committee, is campaigning for changes to company law and debt stress tests to curb asset-stripping by private equity-style owners.
- • Polly Toynbee argues the Poundland case reflects a wider pattern in which private equity buyouts have hollowed out British retailers, including Woolworths, BHS, Debenhams and Toys R Us.
Summary
Polly Toynbee, writing in The Guardian, describes Poundland's crisis through a visit to one of its stores, where staff are demoralised and shelves are emptying because owners have withheld £50m needed for new stock and wages. The store is one of about 600 in peril, with around 12,000 employees at risk of losing their jobs and 30,000 jobs at risk in supply chains. A £10m release on Tuesday prevented an immediate collapse but was described as insufficient.
Gordon Brothers, the US owner that bought Poundland for £1 last year, specialises in buying and restructuring distressed companies. According to the column, it extended a deadline by 10 working days under pressure before moving the profitable business toward administration. Toynbee argues the firm profits more from closing Poundland and breaking it up. At Wednesday's closed-session select committee on business and trade, managing director Barry Williams, who has served for many years, reportedly challenged the owners and told MPs the business made an £18.1m operating profit in the year to September. Gordon Brothers has reportedly turned down offers, including one from Martin Property Group, owners of NCP car parks.
Toynbee notes that Gordon Brothers holds about £30m of debt and, as both owner and creditor, would be repaid first in administration, ahead of staff owed wages. Redundancy payments would fall to the taxpayer if no money remained. Andy Burnham has demanded answers, but the column stresses that Gordon Brothers has no legal obligation to consider staff or public concerns. Liam Byrne, chair of the Commons business and trade committee, called the firm "much like a wolf on Wall Street, on the British high street" and said it had taken millions out of Poundland while describing the business as being on a knife-edge.
The column places Poundland within a broader pattern of private equity and venture capital buyouts damaging retailers, citing Woolworths, BHS, Debenhams, WHSmith, Toys R Us, Maplin and TM Lewin. Byrne is campaigning for company law changes that would move away from shareholder primacy, as in Germany, limit pension funds' focus on short-term gains, and introduce stress tests to prevent asset strippers from overloading businesses with debt. Toynbee concludes that the staff, including store manager Jim and his team, face an uncertain wait of about two more weeks, and that legal change may come too late for them.
Gordon Brothers, the US owner that bought Poundland for £1 last year, specialises in buying and restructuring distressed companies. According to the column, it extended a deadline by 10 working days under pressure before moving the profitable business toward administration. Toynbee argues the firm profits more from closing Poundland and breaking it up. At Wednesday's closed-session select committee on business and trade, managing director Barry Williams, who has served for many years, reportedly challenged the owners and told MPs the business made an £18.1m operating profit in the year to September. Gordon Brothers has reportedly turned down offers, including one from Martin Property Group, owners of NCP car parks.
Toynbee notes that Gordon Brothers holds about £30m of debt and, as both owner and creditor, would be repaid first in administration, ahead of staff owed wages. Redundancy payments would fall to the taxpayer if no money remained. Andy Burnham has demanded answers, but the column stresses that Gordon Brothers has no legal obligation to consider staff or public concerns. Liam Byrne, chair of the Commons business and trade committee, called the firm "much like a wolf on Wall Street, on the British high street" and said it had taken millions out of Poundland while describing the business as being on a knife-edge.
The column places Poundland within a broader pattern of private equity and venture capital buyouts damaging retailers, citing Woolworths, BHS, Debenhams, WHSmith, Toys R Us, Maplin and TM Lewin. Byrne is campaigning for company law changes that would move away from shareholder primacy, as in Germany, limit pension funds' focus on short-term gains, and introduce stress tests to prevent asset strippers from overloading businesses with debt. Toynbee concludes that the staff, including store manager Jim and his team, face an uncertain wait of about two more weeks, and that legal change may come too late for them.
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