Poundstretcher has blamed poor festive sales on heavy discounting at Woolworths and the economic climate.
The chain's owner Instore has also closed 13 of the 33 furniture retailer Ponden Mill's outlets, only bought at the end of 2007, after a ' disappointing' performance.

Overall, Poundstretcher announced like-for-like (lfl) sales dropped 1.9% in the five weeks to January 3 as customers filled their baskets as Woolworths cleared their shelves.

The company also said it seemed likely it would make £5m loss for the year to the end of February.

A company statement said: "In particular, the value sector has been significantly affected by the heavy discounting undertaken by the administrators of Woolworths throughout the run-up to Christmas."

However, rival chain Poundland revealed last week lfl sales of 3.9%, with total sales, including new stores, up 24.3 per cent year on year.