Poundland has been sold for just £1 to US firm Gordon Brothers, with a major business overhaul now on the cards for the struggling discounter.

The sale by Polish parent company Pepco marks the end of its ownership of the 825-store UK chain, which employs around 16,000 people.

Pepco confirmed the high street discount store had been sold for a “nominal” sum, which is understood to be €1, after continued sales weakness and rising cost pressures.

The new owners are expected to fund a wide-ranging restructuring plan, with up to £80m in support committed. According to the BBC, the plan could include a significant number of store closures, though this has not yet been confirmed, and the proposals will need approval from the High Court.

Poundland’s current managing director Barry Williams will continue to lead the business, which will keep trading under its current brand in the UK and as Dealz in Ireland and the Isle of Man.

It is also understood that Gordon Brothers, which previously owned Laura Ashley, said it was backing Williams’ turnaround plan to stabilise and reshape the business.

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Pepco had owned Poundland since 2016 but put the chain up for sale earlier this year following continued sales decline, particularly in the first quarter. It warned in March that the UK retail environment had become “increasingly challenging”, and that higher National Insurance contributions were adding pressure.

As part of the deal, Pepco will also take on at least £30m of Poundland’s debt, with an additional £30m loan to follow depending on the success of the restructuring.

While Pepco said Poundland remained a “well-loved” brand, the sale is seen as a strategic shift to focus on higher-margin general merchandise and clothing across continental Europe. It may retain a minority stake in the business.

Pepco Group CEO Stephan Borchert said: “The agreed sale of Poundland marks an important milestone in our strategic plan to move away from FMCG and focus predominantly on Pepco, our higher margin clothing and general merchandise business.

“As set out during our Capital Markets Day in March 2025, this transaction will strongly support our accelerated value creation programme by simplifying the Group and focusing on our successful Pepco business. I am confident that Pepco has the right foundations to be one of Europe’s most successful discount retailers, delivering customer satisfaction, profitable growth and shareholder value.

Borchert added: “Poundland remains a key player in UK discount retail, with millions of customers annually and a well-loved brand and proposition. We want to sincerely thank all the Poundland team for their ongoing commitment and contribution to the Group and wish Barry Williams and his team all the best for the future.”