As many as 12,000 jobs could be lost as high-street chain Wilko has officially gone bust.
The retailer, which has 400 shops including 26 in London, entered administration this morning. Administrators from PwC will take over the business to realise any remaining value for its creditors.
The administrators will initially keep all stores open, without any “immediate” redundancies for staff. But if a buyer for some or all of the business can’t be found, it is likely that staff will lose their jobs.
Zelf Hussain, Joint Administrator and PwC partner, said: “It is incredibly sad that a well loved, family business that has been on the high street for over 90 years has had to go into administration today. I know the management team has left no stone unturned in trying to save the business.
“Many high street retailers are facing a number of well-documented challenges and Wilko has been significantly impacted by the headwinds facing the industry including inflationary pressure and rising interest rates.
“Wilko has been a staple of many British high streets for decades. We know that the appointment of administrators, which comes during an already challenging time for many, will be an unsettling development for everyone involved with the business - particularly its committed team members - and the communities it serves.
“As administrators we will continue to engage with parties who may be interested in acquiring all or part of the business. Stores will continue to trade as normal for the time being and staff will continue to be paid.”
David Steinberg, partner and insolvency expert at law firm Stevens & Bolton, said some of the more successful stores could be saved as there would no longer be an obligation for buyers to take on the entire business.
“The administrators’ immediate priority will be to try to sell as much of Wilko’s business as possible, as a going concern.
“One of the key advantages of administration is that it offers the opportunity to fleet-footed buyers to acquire only those sites that interest them. This contrasts starkly with the challenge faced by the directors pre-insolvency, which was to find a buyer for the company as a whole, meaning they would have been burdened with legacy liabilities and non-core assets.
“Once the business assets are sold, the administrators will turn their attention to exploring possible recovery actions against directors and other third parties. This will inevitably include scrutinising pre-insolvency transactions with connected parties, such as dividends to shareholders, to see whether any payments to those parties could be clawed back for the benefit of creditors.”
When it filed the notice, there were still hopes of a last-minute rescue deal, but prospective buyers - including Laura Ashley owner Gordon Brothers - reportedly withdrew their interest.
Earlier this year, Wilco secured £40 million in funding from Homebase owner Hilco, which helped keep the family-owned chain alive for the past six months.
CEO Mark Jackson said: “Over the past six months we’ve been open with all our stakeholders including our team members that we’ve been considering options to accelerate a turnaround plan given that we needed to make significant changes to the way we operate to restore confidence and stabilise our business.
“We left no stone unturned when it came to preserving this incredible business but must concede that with regret, we’ve no choice but to take the difficult decision to enter into administration.”
“I’d like to take this opportunity on behalf of the directors and the Wilkinson family to thank all of our customers and our hardworking team members across our stores, logistics and support centre who remained loyal to Wilko. It’s been an honour to have worked alongside you all as we fought to realise and to maximise the significant opportunities that existed to re-establish a profitable Wilko.
“We’ve a history steeped in serving customers and communities going back to 1930. Our founder JK Wilkinson started with a single hardware shop in Leicester and for over 90 years busy, hard-working families have come to us to get their household and garden jobs done quickly, simply and at the best value prices possible.
“We thrived and successfully grew from one to 400 stores. We did this by listening to our customers – working out what they needed and then making sure we gave it to them. Whether it was recognising the demands for DIY products in the 1950’s, creating our first wilko product range in the 1970’s, launching online shopping in the 2000’s or being the first to sell 100% plastic-free wipes across our whole range.”
Wilko, which changed its name from Wilkinson Hardware Stores in 2014, would be the highest-profile business collapse in the UK this year, as insolvencies hit their highest level since the Global Financial Crisis. Other retailers to have gone bust lately include Cath Kidston and Made.com.
Jeremy Whiteson, restructuring and insolvency partner at Fladgate, said: “The collapse of Wilko is a result of the ‘perfect storm’ hitting high street retailing.
“Long term structural shifts in consumer behaviour were evident before the covid pandemic. That lead to the collapse of many household names before or in the early stages of the pandemic- including Debenhams, Arcadia group, Mothercare, Karen Millen and others. This reflected a shift in consumer preference to online shopping, downward price pressures, rising expenses and increasing labour shortages.
“It may not be a coincidence that the filing of an intention to appoint administrators occurred on the same day as an announcement of increased bank rates.”
