The budget retailer Wilko has said it is on the brink of collapse, with more than 12,000 jobs at risk, as the high street struggles with rising costs and lacklustre consumer demand.
The household and garden products retailer, which has about 400 stores, said it had filed a notice of intention to appoint administrators at the high court on Thursday with advisory firm PricewaterhouseCoopers (PwC) lined up.
PwC has been working with Wilko in recent months to try to find a buyer in an attempt to secure additional cash needed by the end of this month to keep trading.
If Wilko does collapse into administration it would be the largest retailer to do so since convenience store chain McColl’s just over a year ago – which was rescued by supermarket chain Morrisons.
The cut-price retailer, which was founded in 1930 when JK Wilkinson opened his first store in Leicester, has stepped into many high street gaps left by the collapse of Woolworths in late 2008, but has struggled in the tough economic climate. Last year it borrowed £40m from the restructuring specialist Hilco, cut jobs, rejigged its leadership team and sold off a distribution centre as it faced a cash squeeze after falling to a loss.
Sales fell as the retailer had to leave gaps on shelves after it struggled to pay suppliers and at least one credit insurer withdrew trade cover, prompting some suppliers to pause deliveries.
Despite its problems, the owners of Wilko, led by the Wilkinson family, took £3m in dividends in the 12 months to the end of February 2022. In accounts filed at Companies House last year, the group’s auditors warned it had “insufficient committed financing” to withstand a “severe but plausible downturn in trading activity”.
Hilco, which owns Homebase and once owned HMV, is likely to be in a prime position to take control of Wilko should it fall into administration as one of its biggest creditors.
A notice of intention protects a business from creditors for 10 days in order to give it time to secure its finances. The notice does not necessarily mean administrators will be appointed.
Mark Jackson, the chief executive of Wilko, said: “While we can confirm we’ve had a significant level of interest, including indicative offers that we believe would meet all our financial criteria to recapitalise the business, at present, we don’t today have an offer that provides the necessary liquidity in the time we have available, given the mounting cash pressures we’re faced with.
“Unfortunately, with this in mind, today we’re having to take the difficult decision to file a [notice of intention to appoint administrators].”
Jackson said the business would continue to hold discussions with interested parties and would aim to secure its future “as fast as possible”.
“We continue to believe that our robust turnaround plan, with significant re-stabilisation cost savings in progress, will deliver a profitable Wilko and maximise the significant opportunities that we know exist,” he said.
Andy Prendergast, the national secretary for the GMB union, which represents some Wilko workers, said: “This is extremely concerning but we remain hopeful that a buyer can be found.
“Wilko’s staff deserve reassurance that their jobs are safe. We hope this is the number one priority going forward.”
https://news.google.com/rss/articles/CBMic2h0dHBzOi8vd3d3LnRoZWd1YXJkaWFuLmNvbS9idXNpbmVzcy8yMDIzL2F1Zy8wMy9idWRnZXQtcmV0YWlsZXItd2lsa28tbWFrZXMtYWRtaW5pc3RyYXRpb24tbW92ZS1yaXNraW5nLTEyMDAwLWpvYnPSAQA?oc=5
2023-08-03 17:09:00Z
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