Poundstretcher has launched a Company Voluntary Arrangement (CVA) proposal, as part of a major restructuring.

The retailer will make changes to its UK store portfolio, renegotiate rents, reduce head office costs and stem losses from underperforming outlets.

No store closures or job cuts have yet been specified as part of the proposed CVA, to be carried out with KPMG, as Poundstretcher aims to focus on cutting rent costs across its 450-strong store estate.

It proposed that total of 94 stores would continue to pay the same rent, while 84 would see reductions of between 30 per cent and 40 per cent over the next three years, and the remaining 253 stores will pay six weeks full rent before adopting them based on “commercial merits”.

Poundstretcher also occupies a further 23 stores under leases where the tenant is a connected company, Poundstretcher Properties. This company will be placed into administration prior to the decision date of the CVA.

Will Wright, a restructuring partner at KPMG, explained: “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.

“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 three quarters of its creditors to approve the CVA for it to proceed following a vote on 2 July.

The retailer directly employs more than 5,500 people across its store network, Leicester warehouse and head office.

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