Poundworld has collapsed into administration, putting more than 5,000 jobs at risk, after rescue talks failed over the weekend.
It is the latest blow for Britain’s struggling high streets, where a string of retailers and restaurants have shrunk or collapsed due to rising costs and a consumer spending squeeze.
Poundworld, which has 335 shops, filed a notice of intention to appoint an admnistrator last Thursday, giving it temporary protection from its creditors.
Deloitte, which was appointed as administrator on Friday, said Poundworld would trade as usual while it sought a buyer for all or part of the business, adding that no redundancies or store closures were planned.
At Poundworld in Hyde, in Tameside, Greater Manchester, shoppers were dismayed to hear of the chain’s demise.
“What a shame,” said Sylvia Andrew, 61, who had just paid a pound for a dummy security camera to protect her hen house. “If someone comes to nick my chickens they’re not to know it’s not real. If you put two AA batteries in a light flashes,” she said.
Currently signed off sick, she counts every penny: “At Poundworld you get two Pears soaps for £1. It’s £1.50 at the supermarket,” she said.
Joanne Betts, 48, a carer, had just bought four packets of glow sticks for £1 each and some bin bags. She said: “I didn’t think a place like this would close. I’m in every week buying things I don’t need.”
Inside, shoppers could spend a pound on anything from flip-flops to rat poison or packets of Aunt Bessie’s Yorkshire pudding mix.
One of Poundworld’s problems may have been its competitors. Next door to its Hyde store is Bodyworks, a discount cosmetics outlet. Next to that is B&M Bargains, a northern chain that recently announced plans to open 45 stores in southern England.
Add to that the Quality Save in the precinct, the Iceland in the shopping centre carpark and a branch of Jack Fulton, the Yorkshire frozen food retaile , and it’s clear bargain hunters are spoiled for choice.
Deloitte said Poundworld had struggled in an increasingly competitive market for discount goods, but also blamed “high product-cost inflation, decreasing footfall [AND]weaker consumer confidence”.
Chris Edwards, who founded the business in Wakefield, Yorkshire, in 1974 before selling it to TPG for £150m, is also thought to have been interested in buying back the business.
Deloitte’s joint administrator, Clare Boardman, said: “The retail trading environment in the UK remains extremely challenging and Poundworld has been seeking to address this through a restructure of its business.
“Unfortunately, this has not been possible. We still believe a buyer can be found for the business, or at least part of it, and we are keeping staff appraised of developments as they happen. We thank all employees for their support at this difficult time.
A TPG spokesperson said: “This was a difficult decision for every party involved. We invested in Poundworld because of our belief in how the company serves its customers and the strength of its employees.
“Despite investing resources to strengthen the business, the decline in UK retail and changing consumer behaviour affected Poundworld significantly.”
The retail analyst Nick Bubb said the relative health of Poundworld’s rival Poundland, despite a crowded marketplace for discount retailers, indicated the business had been poorly managed.
"Poundland is doing OK, despite the general pressure on the high street pound chains from the growth of B&M and Home Bargains in food and toiletries and the growth of Aldi and Lidl, " he said.
“So it must be down to management, and I suspect Poundworld lost a lot of momentum when the founder, Chris Edwards, stepped back from the business.”
The demise of Poundworld follows the collapse into administration this year of the electronics firm Maplin and Toys R Us.
The high street has also been rocked by a succession of retailers and restaurant chains announcing plans to shut stores amid tougher trading conditions.