From pick ‘n’ mix to in a fix – how under-pressure Wilko fell from grace
The news yesterday that Wilko had filed a notice of intention to appoint administrators probably came as no surprise to our readers who have been following the saga over the last 18 months.
The fact that 12,000 jobs hang in the balance is a huge cause of concern for every large retailer, who could be facing similar pressures to those that Wilko has been under for the last year or so. One industry watcher described the situation to me yesterday as “a complete mess”.
In truth – and like many high street retailers – Wilko never recovered from the pandemic.
The first signs of trouble came in January last year when bosses at Wilko said it was undertaking a complete review of its store portfolio and has announced proposals to close up to 15 stores before January 2023 as leases end and where favourable terms cannot be agreed. Some 300 jobs were to go, the company estimated.
All was quiet, until October 2022 when a chain of events unfolded that eventually led to yesterday’s announcement.
On October 20, it was reported that Wilko was considering a range of cost-cutting options after a combination of “soaring inflation, shipment delays and store closures” had impacted its bottom line.
The Worksop-headquartered retailer called in global advisory giant Teneo as cashflow pressures intensified by the cost-of-living crisis continued to bite.
The news came after Wilko brought in Interpath Advisory to refinance its revolving credit facility.
Then, in November, it emerged that Wilko has completed a £48m sale and leaseback of its huge distribution centre in Worksop to delivery firm DHL.
Wilko said the deal is the first in a planned series of “transformational efficiencies”,
The next month saw changes at the top of the company as former Bensons for Beds boss Mark Jackson was named as its new CEO. The news came after it had emerged that Wilko had made a loss of £36.8m for the year to January 29 2022 – a huge swing in the wrong direction from the £4.5m profit it made in 2021.
Wilko entered the new year full of hope that its new boss could turn the ship around.
On January 4, we reported that the retailer had secured a £40m rescue deal via a high street investor.
Hilco has supplied the revolving credit facility just weeks after Wilko warned that it could run out of cash over the festive period.
The optimism didn’t last long; just a week later it emerged that some 95 members of staff at Wilko were reportedly under threat of redundancy after the Nottinghamshire-headquartered firm opted to outsource its customer service operations.
The affected employees were based at Wilko’s contact centre in Worksop.
Wilko’s digital director Ben Exall said the decision was “not something we have undertaken lightly.”
Wilko's retail sales were larger than B&M's a decade ago, now they are a 1/3 of its value competitor. Also fallen below Poundland, Home Bargains, and The Range pic.twitter.com/syO4dL5Wv8
— Patrick O'Brien (@pat_gdretail) August 3, 2023
More job losses followed in February, when Wilko said it was set to lay off some 400 staff as part of a major restructuring drive.
At the time, Jackson said: “We’ve identified significant changes to the Wilko operating model to enable us to stabilise the business and then thrive again. This includes some proposed changes to our management structure at both our stores and head office.”
By May, Wilko was in talks about a company voluntary arrangement (CVA), which it hoped could cut rent costs.
According to reports by Bloomberg, the firm had approached PwC to examine restructuring plans.
The race for cash intensified in July, when it was revealed that the family owners of Nottinghamshire retail giant were considering selling the firm in order to raise funds to secure its future.
Any deal would see the Wilkinson family lose their majority stake in the business.
In a statement, Mark Jackson, Wilko chief executive, said: “We’ve been very open that we’re exploring all the options available to rebound as a business and maximise the significant opportunities that we know exist.”
Later last month, Hilco pumped in another £5m to keep Wilko afloat as it scrambled for cash. It proved too little, too late, as yesterday morning (August 3), we revealed that the company was on the brink of collapse after filing a notice of intention to appoint administrators,
Jackson 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.”
Staff at the stricken firm will be hoping that a buyer comes forward to save what was once one of the high street’s star players, else Jackson’s talk of “significant opportunities” will ring hollow.
