A potential rescue deal that had hoped to save around half of Wilko’s 400 stores and thousands of jobs has collapsed.
Doug Putman, who engineered a turnaround of HMV, issued a statement this morning saying: “It is with great disappointment that we can no longer continue in the purchase process for Wilko having worked with administrators and suppliers over several weeks to seek a viable way to rescue it as a going concern.”
It was reported last week that the deal had run into trouble after some key suppliers said they wanted outstanding debts repaid upfront to guarantee continuing to provide products to the failed chain. There were also concerns that some suppliers, which cancelled shipments to Wilko’s stores when it went into administration, would not be able to ship new stock for several weeks.
Putman subsequently proposed a slimmed-down deal, but reports said that talks eventually broke down because his plan was unable to chart a path to reduce operating costs quickly enough.
Putman said: “We had financing in place and received the full support of [the administrators] PWC, Wilko management and staff representatives, which we are deeply thankful for considering what a challenging time it has been for them.
“However, commitment to overhauling the trading framework of the business with partners and the costs of running Wilko’s legacy operations infrastructure combined has meant that a stable foundation could not be secured to ensure long term success for the business and its people in the way that we would have wanted.”
It was announced last week that B&M was buying 51 Wilko sites. However, administrators later confirmed that 52 other stores in the 400-strong estate would start closing this week.
PwC are believed to be continuing talks with other retailers, including Poundland, The Range, Home Bargains and TOFS, about buying up some of the Wilko sites.
However, the administrator is expected to announce more store closures and job losses in the coming days.
Nadine Houghton, national officer at the GMB union, said that workers had been dealt “another devastating blow” by today’s news, adding: “Wilko bosses should be ashamed that this once great family business now appears to be beyond saving. If they’d have listened, things could have been so very different.”
The union claimed that it had been informed by PwC that all the Wilko stores would close by early October, with the likely loss of all 12,500 jobs.
NAM implications:
- Pragmatic suppliers know the inevitability of liquidation…
- Means:
- Abandoning the Wilko brand.
- Sell-off of shops as vacant retail space i.e. no debt attached, employees possibly available for re-employment by new owners.
- All adding to the existing estates of four main rivals.
- i.e. 200 of Wilko’s current 400-strong estate repurposed…
