Poundstretcher is closing its eight JTF Mega Discount Warehouse stores which it reopened after buying the brand out of administration last year.
The discount chain had reopened a handful of stores and wanted to open another 15 following the acquisition.
However Poundstretcher co-owner and chief executive Aziz Tayub told BusinessLive that taking on big JTF stores with high rates and rents had not fitted in with his Leicestershire-based company’s business model.
JTF stores typically covered 48,000 sq ft, compared to about 20,000 sq ft for Poundstretcher branches.
Instead Mr Tayub said the business was moving some of the JTF range – including garden furniture – into some Poundstretcher stores. He said some staff were also moving to Poundstretcher shops.
Nottinghamshire-based JTF Mega Discount Warehouse initially collapsed last summer when a deal to sell the business fell through. It had employed around 500 people.
The company said that the pandemic had played a significant role in its demise, with the forced closure of stores wiping out fireworks and Christmas sales which were “two of the largest seasonal items for JTF”.
Poundstretcher had stepped in because management were keen to test the water of the “big shed format” that JTF and other retailers used.
Mr Tayub said: “Basically the rents and rates were too high, so we have moved some of the JTF store ranges into our own stores.
“They include a store Merthyr Tydfil, because the JTF store because you can’t have rates and rents of £400,000 per store. We’ve moved others too and some we have closed.
“The original plan had been to see what it was like running big JTF sheds but they were too big for us and we don’t have a big enough range to fill them. We are better at medium sized or smaller stores.
“We have taken some of the staff on, but some were not able to move. There were not many. The people we had in JTF had been employed on a temporary basis so we could see how it went.
“Taking on the business was a good idea – we’ve learned a lot from them and have got a good range of products now because of them.
“Our own stores should do well with JTF products – they have 40,000 lines while Poundstretcher has 8,000.
“We’ve just bought £12 million of garden furniture stock which is just coming into stores now.
“We no longer need the JTF brand – it was more about having their range and trying out bigger shops.”
He said they had closed JTF stores in Leeds, Lincoln, Hull and Newcastle upon Tyne and relocated Margate and Merthyr Tydfil stores into existing Poundstretcher shops.
He also expected two more in Hucknall and Kidderminster to move.
Poundstretcher, which has 353 stores and 6,000 staff, was forced into a CVA of its own in 2020 because of crippling rents, but saw an £80 million turnaround in profits in the space of just one year.
The business made pre-tax profits of £30 million in the 12 months to March, 2021, after renegotiating rents, closing loss-making stores and laying off around 200-250 shop staff.
By comparison, the chain made a loss of £49.5 million in the year to March, 2020.
Mr Tayub previously said Poundstretcher could even go on to make £40 million in pre-tax profits in the trading year which has just ended.
