UK homeware discount retailer Wilko has collapsed into administration, a form of creditor protection that could mean a loss of 12,000 jobs, it said Thursday, as the company could not find any saviour to avert its insolvency crisis to keep its 400 stores operational.
Mark Jackson, said management had “left no stone unturned” in its attempts to save the business.
“But must concede that with regret, we’ve no choice but to take the difficult decision to enter into administration,” he said.
Without the investment, the retailer could not save its 400 shops across the UK.
Wilko — trading sicne 1930 — had been endeavouring to find a rescuer for the business.
If no one would come forward to acquire Wilko or pour money into the company’s business, Wilko would be on the verge of the biggest High Street failure this year.
According to BBC, administrators are expected to be appointed later Thursday. It is understood that the business will continue to trade as normal for now.
The GMB union said the collapse was “entirely avoidable”.
National officer Nadine Houghton said: “GMB has been told time and time again how warnings were made that Wilko was in a prime position to capitalise on the growing bargain retailer market, but simply failed to grasp this opportunity.”
Wilko’s business was already troubled but it came to light last week when it announced its intention to appoint administrators and after that, it would have 10 days to find a rescuer. However, it was unable to close a deal within that time.
Jackson said Wilko had received a “significant level of interest” which he said included “indicative offers that we believe would meet all our financial criteria to recapitalise the business”.
But he said: “Without the surety of being able to complete the deal within the necessary time frame and given the cash position, we’ve been left with no choice but to take this unfortunate action.”
According to a BBC report, Wilko has been struggling with sharp losses and low cash.
The company owes £40m to Hilco — the restructuring specialist. Previously it axed some of its employees, made changes in the leadership team and sold off a distribution centre.
Many of the retailer’s stores are in High Street locations in traditional town centres, which turned into a liability as customers diverted to bigger retail parks and out-of-town locations.
B&M and The Range also posed immense competition to Wilko as the high cost of living has pushed shoppers to seek out bargains.
Richard Lim, chief executive at Retail Economics, a consultancy, said a combination of rising costs, lower customer demand and fierce competition ultimately pushed Wilko to “breaking point”.
“Against the backdrop of seismic shifts in consumer behaviour and the intense pressure on margins, the business was too slow to react to these mounting challenges and paid the ultimate price”, he said.
The company is still owned by the Wilkinson family.
After Woolworths collapsed in 2008, Wilko came to the fore and filled the gaps left on High Streets.
The company also announced Wednesday that it had suspended home deliveries.
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