Tuesday 27 February 2024
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Nottingham

Wilko collapses into administration after no rescue deal found

Wilko, a prominent retailer, has officially entered administration, with PwC taking the reins of the process, leaving 12,000 jobs in jeopardy.

 

The company had been actively seeking a solvent rescue plan since announcing its intention to appoint an administrator last week. Negotiations were underway with several private equity firms, including Gordon Brothers (owner of Laura Ashley), Alteri (owner of Bensons for Beds), and OpCapita. Talks were also held with a competing retailer, but these discussions reached an impasse, culminating in the formal appointment of PwC.

Mark Jackson, Wilko’s CEO, expressed the company’s transparency in exploring options to expedite a recovery plan. He emphasized the need for substantial operational changes to regain trust and stabilize the business. Despite exhaustive efforts to save the company, Jackson acknowledged the painful decision to enter administration.

Founded in the 1930s in Leicester, Wilko expanded to 400 stores but has faced financial struggles for some time. The retailer’s cash flow problems surfaced last year when it postponed supplier payments and requested landlords to switch to monthly rents.

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The situation worsened when credit insurers Allianz Trade and Atradius withdrew coverage in October, complicating Wilko’s operations. Many suppliers began demanding upfront payment, resulting in limited availability in stores over the past year.

A glimmer of hope appeared when Wilko secured £40 million in funding from restructuring specialist Hilco late last year. The new CEO, Mark Jackson, who assumed leadership at the end of the year, initiated cost-cutting measures, including the elimination of over 400 jobs and the sale of its Worksop distribution centers.

Reflecting on the progress since January, Jackson acknowledged the significant savings and the exploration of various options to reduce store costs. Despite the hard-fought battle to keep the business afloat, he conceded that time had run out. The focus now shifts to preserving as many jobs as possible by collaborating with the appointed administrators.

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Wilko Nottingham
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