Discount retailer Poundstretcher is being sold to a private equity firm that owns Majestic Wine and Punch Pubs.
Fortress Investment Group is buying the 322-strong chain for an undisclosed sum from its owner Aziz Tayub, who is retiring. He said the deal would provide the resources and investment needed to take Poundstretcher to its “next stage of growth”.
Andy Atkinson, a former Commercial Director at Morrisons, will join Poundstretcher as its new Chief Executive following the takeover. Current CEO Tristan Phillips will resume his role as Chief Financial Officer. Meanwhile, Morrisons former Chief Operating Officer and Finance Director, Trevor Strain, will join the discounter’s board as a Non-Executive Director.
Fortress stated that it was committed to investing in the business to help it grow its offering and reach across the UK, with it pledging to build better relationships with suppliers.
Ahsan Aijaz, Managing Director and co-head of private equity at Fortress, said: “Poundstretcher is an exciting business in a critical part of the UK retail sector, and we recognise its importance to consumers across the country.
“We have a demonstrated history of investing in sponsored companies to drive growth, increase profitability and job creation – our plans for Poundstretcher are no different. Fortress believes in empowering management teams to deliver their strategy, and we look forward to working with the team to invest in and grow Poundstretcher.”
Atkinson added: “Poundstretcher is an exciting business with huge potential, in a large, growing and resilient sector. We are committed to being long term stewards of the business, investing to grow Poundstretcher and build on the great work established by Aziz and his team.”
In 2022, Poundstretcher exited a company voluntary arrangement (CVA) that saw it offload underperforming stores that had been saddled with high rent charges. The chain has since been working to reinvigorate its stores and product offering, and it has also opened a number of new sites, including some that were the former Wilko branches.
Fortress snapped up Majestic Wine at the end of 2019 for £95m. Since then, Majestic has overhauled its offer and opened 16 new stores, with more sites planned. Last week, it bought Vagabond Wines out of administration, saving nine of the company’s 12 wine bars from closure.
NAM Implications:
- Suppliers should be familiar with the private equity playbook in UK retail by now…
- But this time a deal is being struck with full knowledge of the impacts of current high interest rates (compared with the low interest rate participation in Morrisons and Asda).
- Anticipate a reduction in the size of the Poundstretcher estate as outlets are closed/sold off to create a portfolio that is profitable…
- …and then steady progress.
- (but it may not be nice…)
