Discount retail chain Poundstretcher is set to be acquired by Fortress Investment Group, a US private equity firm, for an undisclosed sum, Sky News has reported.

The deal will add Poundstretcher’s 322 stores, including those operating under the Bargain Buys banner, to Fortress’s growing portfolio of consumer-facing businesses in the UK, which already includes Majestic Wine and Punch Pubs.

Poundstretcher’s new ownership signals a shift in strategy for the long-established discount retailer.

Previously under the leadership of Aziz Tayub, Poundstretcher had explored a potential initial public offering on the London Stock Exchange. But Fortress appears committed to a long-term ownership approach, with plans to invest in and grow the business.

Fortress is placing a strategic bet on the UK discount retail sector, which has seen mixed fortunes in recent years.

While grocery discounters such as Aldi and Lidl have thrived, Poundstretcher and its peers have faced stiffer competition from B&M, Home Bargains, Savers and even the major supermarkets. Poundland, another competitor, recently reported a slight decline in sales.

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Fortress has appointed retail industry veterans to lead Poundstretcher’s turnaround. Andy Atkinson, former commercial director at Morrisons, will become Poundstretcher’s new CEO. Joining him on the team is Morrisons veteran Trevor Strain, who will serve as a non-executive director.

According to the Guardian, Ahsan Aijaz, co-head of private equity at Fortress, said: “Poundstretcher is an exciting business in a critical part of the UK retail sector, and we recognise its importance to consumers across the country.

“We have long believed in the UK and the consumer sector, as evidenced by our investments. We have a demonstrated history of investing in sponsored companies to drive growth, increase profitability and job creation – our plans for Poundstretcher are no different.”

Poundstretcher’s future under Fortress’s ownership remains to be seen. The company has navigated financial challenges in the past, with a 2020 restructuring leading to store closures.

However, with new leadership, investment and a focus on a growing retail sector, Poundstretcher has the opportunity to solidify its position in the UK discount retail landscape.