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The founder of Poundland has warned that the discount company’s collapse could cause retailers across the high street to collapse.
Steve Smith, who founded Poundland in 1990, predicted it would be a “multi-billion pound problem for the government” if the trading business went into administration.
Poundland is on the brink of collapse after its US-based owners, Gordon Brothers, rejected a takeover bid and filed a notice of intention to appoint administrators earlier this week.
The uncertainty has left more than 12,000 staff jobs at risk across Poundland’s 600 stores in the UK and Ireland.
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However, Smith, who sold Poundland for £250m in 2006, believes the collapse of the wider business could trigger 30,000 job losses and cause misery across the retail sector.
He said Subway: ‘I am disappointed. Poundland has two or three thousand suppliers; many only poundland supply them. So those companies will suffer.
‘Poundland brings millions of people to shopping centers and high streets every week.
Now imagine all those customers if there was no Poundland store for them to go to. Then other traders will suffer. There will be many more traders.
‘This will have a massive knock-on effect.’
Gordon Brothers bought struggling Poundland from Polish retail group Pepco last year for a nominal £1.
A note sent to suppliers and seen by The Sunday Times, revealed that sales at Poundland stores rose by 8.4 per cent in the three weeks to October 18.
Nevertheless, Gordon Brothers notified the High Court that bankruptcy could be imminent, rejecting a rescue bid submitted by Londonderry-based Martin Property Group (MPG).
Smith said: ‘The management team have done a good job.
‘To find out they are going to put it into administration is absolutely crazy. It’s a crying shame.’
‘It’s not like Poundland is suffering; it continues to improve. Poundland could be here for another 30 years.’
The former Poundland boss said he was ‘waiting for a call’ from Prime Minister Andy Burnham, who said the government was ‘ready to support Poundland during this ‘time of deep concern’ for staff.
Smith warned that Poundland falling into administration “will cost every taxpayer billions of pounds if the government does not help”.
He added: ‘If you take even 12,000 people, that’s half a billion pounds in wages a year.
‘I estimate 30,000 people may lose their jobs. All those people want to go to benefits. This is a multi-billion pound problem for the government.’
It is understood Gordon Brothers wants to break up Poundland, with rivals Poundstretcher, B&M and Lidl interested in potentially buying up its stores.
Smith claimed he had been trying to buy back Poundland for months, but that Gordon Brothers “won’t even talk to him”.
He said it was now too late for him to put together a rescue attempt, and he supports MPG’s offer.
However, a source familiar with the sale process said Subway that Gordon Brothers claimed they had not heard from Smith.
The source added that Gordon Brothers believed they were taking the path that was “the best option to preserve jobs and make returns to creditors”.
They said this was because their sales plan ‘established retail operators … bolt on scores of stores to their existing operations’.
“These recognizable brands then pick up those employers and move them to their pension schemes and to their employee benefits.”
Gordon Brothers previously said: “While Martin Property Group has been identified as the preferred bidder by Poundland’s management team, care must be taken to properly evaluate all active bids. These options will be thoroughly and objectively evaluated with a view to minimizing uncertainty for the people of Poundland and all relevant stakeholders.’
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