POUNDLAND'S profits have tumbled by £642million with the popular discount chain hitting out at recent Budget moves by the Labour government.
Owner of the beloved UK business - the Polish Pepco Group - said it would consider “every strategic option” for the struggling chain.
Pepco said it was facing "a higher cost outlook in the UK following the recent Budget" announced by Labour Chancellor Rachel Reeves.
And the group said it had seen a "significant decline in performance" over the last two years - hitting their profits.
A 3.5% drop in like-for-like sales has also left the retail chain reeling.
Stephan Borchert, chief executive of the Pepco Group, said they would be looking at “every strategic option for this company to bring it back on track".
Asked if Poundland would stay in the group, Mr Borchert said he would set out more plans for the group’s strategy and on Poundland when he hosts a Capital Markets Day next March.
A spokesperson said the huge loss was "due to a non-cash impairment at Poundland that relates to the acquisition of the UK chain in 2016".
However, Poundland grew its revenue by 0.2% to £2.1 billion in the year to 30 September 2024.
Mr Borchert added: "At Poundland, recent performance has been very challenging, impacted by declines in clothing and general merchandise following the transition to Pepco-sourced product ranges at the start of the year.
"We are taking swift action to get Poundland performance back on track, focusing on a return to Poundland's strengths."
The group said it made the move to shift to Pepco-sourced ranges to help drive scale, increase cost savings and lower prices for customers.
But it admitted: "It became clear as the year progressed that both the planning and execution of this implementation had shortcomings, with gaps in clothing and general merchandise product for the UK customer, impacting revenues and profitability during the year.
"It further became clear that our UK customers had a different expectation of the Poundland brand proposition compared with Pepco customers which has led to a fundamental rethink of approach going forward."
Chancellor Rachel Reeves confirmed the Government will hike the National Living Wage by 6.7% from April 1 back in October.
She said: "It was the Labour government that introduced the National Minimum wage in 1999.
"It had a transformative impact on the lives of working people.
"As promised in our manifesto, we asked the Low Pay Commission to take account of the cost of living for the first time.
"I can confirm that we will accept the Low Pay Commission recommendation to increase the National Living Wage by 6.7% to £12.21 an hour."
Meanwhile, the National Minimum Wage for 18 to 20-year-olds will be hiked from £8.60 to £10 an hour – a 16.3% rise and biggest increase in the rate on record, the Chancellor confirmed.
It will see eligible youngsters in full-time employment earn an additional £2,500 a year.
Both new rates are less than the £12.60-an-hour rate calculated by the Living Wage Foundation and paid by 15,000 employers.
The Real Living Wage is paid voluntarily to staff by bosses and is not a legal requirement unlike the Minimum Wage.
In Budget documents, the Government also said it plans to create a single adult wage rate for workers across the UK "over time".
But while the increase in National Minimum Wage announced today is good news for workers, it will pile pressure on businesses.
Robert Salter, director at Blick Rothenberg, said: "The increase in the National Minimum Wage from April 2025 to £12.21 means that small businesses have seen a 37% increase in the National Minimum Wage since the 2020/21 year.
"This is a significant real increase on the costs faced by businesses and could easily result in increased unemployment over time.";
