Poundland owner Pepco Group has said buyers are interested in the budget retail chain’s 825 UK stores.
Chief executive Stephan Borchert had signalled options to split Poundland from the business were being assessed.
“There are definitely interested parties for this business,” he said, without adding details on pricing or the stage of talks.
Poundland generated over €2 billion (£1.7 billion) last year but was operating in an “increasingly challenging” UK retail sector, Pepco said in a capital markets day update.
“That is only intensifying,” the company added, with Budget-related tax increases set to place Poundland under further pressure ahead.
Pepco announced that it is making a strategic move away from FMCG, including actively evaluating all strategic options to spin off Poundland.
They plan to focus on the Pepco brand as the single future format and focus on the higher margin clothing/GM offer, and ‘white space’ opportunities in Central, Eastern and Western Europe. They are also considering the separation of the well-performing Dealz Poland over the medium term.
Analysts at Panmure Liberum said they think a sale of Poundland "could potentially lead to market share opportunities" for rival B&M European Value Retail SA (LSE:BME), along with other value FMCG and general merchandise retailers.
"It is difficult to see who would be interesting in buying the Poundland business – B&M and Home Bargains come to mind but the store format and locations (more high street) is very different from their core propositions.
"Given Poundland is loss making, it is possible that Pepco may just have to separate Poundland from the listed business and either give it a separate listing (unlikely in the current climate) or run it as a private business."
Pepco’s exit from Germany was also noted, which is "a positive" for Primark (Associated British Foods).
"Note that while Primark has been struggling in the UK recently like a lot of value retailers, they have been delivering LfL growth in Europe. Primark has 27 stores in Germany which is around 7% of the group’s total selling space."