
Former Poundland boss Barry Williams was parachuted back onto the board of the discount chain late last month as owner Pepco looks to address its struggling performance.
Williams stepped back from the helm of the value retailer in September 2023, when Pepco moved him across to head up and the group’s European sister chain.
His arrival coincides with the departure of Poundland’s managing director Austin Cooke, who resigned from the business after seven years and more than a year since he took over from Williams.
The return of its former boss comes at a crucial time for Poundland after it reported its fourth consecutive quarter of declining sales, which fell 7.3% in the three months to 31 December and 3.6% in its most recent financial year.
Pepco has been working with advisors at AlixPartners on a “comprehensive assessment” of the business after the underwhelming results contributed to a £650m writedown on the group’s balance sheet and a £560m net loss.
Poundland’s weak performance is a stark difference to the group’s Pepco and Dealz divisions, which both reported a like-for-like sales increase of 1.4% and 6.6% over the golden quarter.
Williams’ return certainly signals something major is afoot, with early reports suggesting the group is considering a mass restructuring of the entire business or even a possible sale.
With Pepco set to reveal its grand plan for Poundland on its Capital Markets day on 6 March, Retail Gazette takes a look at what Williams may have up his sleeve and what’s next for one of the high street’s much-loved retailers.
A leadership reshuffle
Williams is back working with Poundland on an interim basis while the group pulls together a plan for Poundland and its sister chain Dealz’s Irish division.
Williams’s return has been well received thanks to his proven track record of transforming the business during his time as managing director between 2017 and 2023.
During his tenure, he helped to expand Poundland’s product offering to include more clothing, homewares and food, as well as move the business away from its single £1 price point.
Williams, who also spent seven years at Asda, has spent much of the last two years busy turning things around at a wider group level after the group’s European division issued multiple profit warnings towards the end of 2023.
Several sources that have worked alongside the former Poundland boss described him as “one of the best people I’ve ever worked for” and said he was “the best man for the job” to help turn things around.
Retail analyst Nick Bubb says, “It makes a lot of sense for the veteran Barry Williams to be parachuted back from Poland to man the barricades and there’s no point in having two bosses, so I can see why Austin Cooke had to go”.
However, he notes that “The world is a tougher place since Barry was last running the business, with a lot more discount competition on the High Street from Aldl and Lidl and on retail parks from B&M, Home Bargains and The Range”.
What went wrong for Poundland?
Poundland was poised to become one of the standouts of the discount sector following the collapse of Wilko in 2023. However, it has since faced challenges and continues to rack up steep losses.
Its struggles first materialised when the retailer’s owner phased out its UK-based Pep&Co clothing range and general merchandise in the summer of 2023 in exchange for Pepco-sourced products that were available across Europe.
The group attributed Poundland’s 7.3% LFL decline over the golden quarter to “continued weak clothing and general merchandise performance”.
However, Pepco said in its latest quarterly results its toughest comparative quarter for Poundland was now behind it, and that it anticipated the negative sales performance to moderate as it moved through the year.
A person familiar with the situation admitted the ranges implemented were not right for Poundland customers and that the business had spent the last few months making changes to the ranges to correct the key problem areas, such as expanding its men’s and women’s clothing.
GlobalData retail analyst Sophie Mitchell argues the issues at Poundland “Evidently go beyond the failed introduction of its Pepco-sourced GM and clothing range”.
Mitchell says the like-for-like declines in its core FMCG category is reflective of the retailer failing to entice consumers away from other discounters and the big supermarkets.
She adds: “The failure of its GM and clothing range has likely been due to a lack of marketing and the popularity of well-established value clothing ranges in the UK from the grocers and Primark.”
Similarly, Shore Capital equity analyst David Hughes notes that Poundland has lost its value perception in recent years, “Driven by the real success of the Clubcard and Nectar card schemes we’ve seen at Sainsbury’s and Tesco”.
He explains that the improved value offer from the two supermarket giants and exclusive loyalty prices has meant “there’s slightly less incentive in consumers minds to shop at the discounters because they don’t feel like they’re getting as big a saving as perhaps they felt they were before”.
What’s next?
Pepco has been working closely with AlixPartners as it explores “every strategic option” for the discount chain ahead of its Capital Markets Day on 6 March, where it will update shareholders on its plans.
Bubb argues that working with Alix suggests the group “may well be thinking of a company voluntary arrangement or a pre-pack [administration], to cut a big tranche of stores, even though I personally think that Pepco is rich enough to bear any losses in its UK subsidiary”.
A person familiar to the situation said the group was considering several options for the retailer but that no final decision had been made.
Pepco Group chief executive Stephan Borchert said at the start of the month that “getting Poundland back on track is a key priority” and that the business had taken “immediate measures” to improve cash performance and strengthen its customer proposition.
Borchert previously admitted to Reuters that the retailer had “lost a bit of its DNA” with the transition to Pepco ranges and was working to “bring this back”.
The retailer launched its ‘Home of the £1’ marketing campaign in December, and further increased the number of core items at £1 or below from 1,500 to almost 2,400 at the start of the year. It also launched its own rewards app in October.
Hughes argues there “probably needs to be a hard look at [Poundland’s] range to make sure that the lines there are adding value”, adding “a tight range is an efficient range”.
He adds that its makes sense for the retailer to increase the number of its products priced around £1 “because it’s synonymous with the name”.
“It’s offputting when you go to Poundland and there are lots of things which are much more than a pound,” Hughes says.
Pepco has also put a pause on the retailer’s expansion plans for the year. Poundland, which opened 84 last year, shuttered 13 stores in its most recent quarter, which it attributed mostly to lease expirations.
The discount chain has also since closed more than a dozen of the 64 former Wilko sites it took on in September 2023 when its high street rival collapsed into administration. As of 10 December 2024, only 46 belonging to the fallen value retailer remained in Poundland’s portfolio.
Pepco is remaining tight-lipped on how it plans to improve Poundland’s performance until it reveals all next month, but its clear that Williams will likely play a key role in the strategy that it pulls together.
Whether the former boss will stay to see the turnaround through is another question as the group declined to comment on whether his return will extend beyond its Capital Markets Day.
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