Poundstretcher is closing its eight JTF Mega Discount Warehouse stores which it reopened after buying the brand last year.
The discount chain had reopened a handful of stores and wanted to open 15 more following the acquisition.
However, Poundstretcher co-owner and managing director Aziz Tayub told BusinessLive that supporting large JTF stores with high rates and rents did not fit the business model of his Leicestershire-based company.
JTF stores typically covered 48,000 square feet, compared to around 20,000 square feet for Poundstretcher branches.
Instead, Mr Tayub said the company was moving some of the JTF range – including garden furniture – to select Poundstretcher stores. He said some staff were also moving to Poundstretcher stores.
Nottinghamshire-based JTF Mega Discount Warehouse initially collapsed last summer when a deal to sell the business fell through. It employed about 500 people.
The company said the pandemic played a big part in its demise, with forced store closures wiping out fireworks and Christmas sales that were “two of the biggest seasonal items for JTF”.
Poundstretcher had stepped in because management wanted to test the “large shed format” used by JTF and other retailers.
Mr Tayub said: “Basically the rents and rates were too high, so we moved some of the JTF store lines to our own stores.
“They include a Merthyr Tydfil store, because the JTF store because you can’t have rates and rents of £400,000 per store. We also moved others and closed others.
“The original plan was to see what it was like to run large JTF hangars, but they were too big for us and we don’t have a big enough range to fill them. We are better at medium or smaller stores.
“We hired some of the staff, but some were unable to travel. There weren’t many. The people we had in the JTF had been employed on a temporary basis so we could see how it was going.
“Taking over the business was a good idea – we learned a lot from them and we now have a good range of products thanks to them.
“Our own stores should do well with JTF products – they have 40,000 lines while Poundstretcher has 8,000.
“We have just bought £12m worth of garden furniture stock which has just hit the shops.
“We don’t need the JTF brand anymore – it was more about having their range and trying bigger stores.”
He said they had closed JTF stores in Leeds, Lincoln, Hull and Newcastle upon Tyne and moved Margate and Merthyr Tydfil stores to existing Poundstretcher stores.
He also expected two more in Hucknall and Kidderminster to move.
Poundstretcher, which has 353 stores and 6,000 staff, was forced to set up its own CVA in 2020 due to crippling rents but has seen profits rise by £80m in the space of just one year.
The business made pre-tax profits of £30m in the 12 months to March 2021 after renegotiating rents, closing loss-making stores and laying off around 200-250 store workers.
By comparison, the chain posted a loss of £49.5m in the year to March 2020.
Mr Tayub had previously said Poundstretcher could even go on to make £40million in pre-tax profits in the trading year just ended.