Poundstretcher is considering closing more than half of its UK stores as part of a survival plan.
Up to 253 shops are at risk of closure if landlords do not agree to rent cuts or holidays, the discount retailer said.
A spokesperson said that the talks form part of a wider restructuring plan aimed at “stemming losses” from underperforming stores.
It employs 5,500 people across 450 shops, its warehouse and head office.
Poundstretcher, which also owns the Bargain Buys chain, has launched a company voluntary arrangement (CVA), an insolvency process that allows companies to continue trading while pushing through closures and rent cuts.
It will be overseen by the accountancy firm KPMG.
Under the proposals, 253 stores will pay full rent for an initial period of six weeks, “after which continued trading will depend on the commercial merits of each store with the relevant landlords’ collaboration”, KPMG said in a statement.
The CVA also proposes slashing rents for another 84 shops by up to 40% for a period of three years.
A further 23 stores could also shut as Poundstretcher plans to put a subsidiary group that owns them into administration before the deadline for voting on the plans.
Several big brands have been struggling in recent weeks due to lockdown measures introduced in March to stop the spread of Covid-19.
Non-essential shops only reopened in England and Northern Ireland this week.
But Will Wright of KPMG said the problems weren’t entirely due to the virus: “Poundstretcher has suffered from significant impacts to profitability on several fronts over a sustained period, which were then further exacerbated by the impact of Covid-19 on footfall.”
“With the directors of the business having explored a number of options, this CVA seeks to safeguard the long-term future of the business, across a smaller, more sustainable store estate.”
Cath Kidston, Laura Ashley and the UK arm of Victoria’s Secret have all called in administrators. On Monday, the UK’s biggest building merchant Travis Perkins announced the closure of 165 stores.
Poundstretcher landlords and other creditors have until 2 July to vote on the CVA, which needs to be approved by at least 75% of its creditors.