Home » UK Business News » Wilko on the verge of bankruptcy, putting 12,000 jobs at risk

Wilko on the verge of bankruptcy, putting 12,000 jobs at risk

By Hugh Fort in UK Business News, posted August 3, 2023

The budget retail chain Wilko is near to collapse, putting 12,000 of its staff at risk.

The retailer sells household and garden products at 400 stores across the UK and has now filed a notice of its intention to call in administrators as it battles increasing costs and a fall in demand.

PricewaterhouseCoopers (PWC) has been assisting the company with its search to find a buyer to put in the cash needed to survive but has been unsuccessful.

If it goes into administration, the collapse of Wilko will be the largest in the UK since the convenience store chain McColl's a year ago.

McColl's was bought out by Morrison's, but Wilko has been struggling for some time.

Wilko, founded in 1930 by JK Wilkinson, has been struggling in the challenging economic environment.

Last year, it borrowed £40m from restructuring specialist Hilco, reshuffled its leadership team, and sold a distribution center due to a cash crunch after reporting a loss.

The retailer's sales dropped as it struggled to pay suppliers, leading to gaps on shelves and causing some suppliers to halt deliveries.

Despite these challenges, the Wilkinson family, who own Wilko, took £3m in dividends in the year ending February 2022.

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The company's auditors have previously warned it lacks sufficient committed financing to withstand a severe downturn in trading activity.

Hilco, the owner of Homebase and former owner of HMV, is likely to be in a strong position to take control of Wilko if it goes into administration, as it is one of the company's largest creditors.

The filing of a notice of intention provides a company with a 10-day protection from creditors while it attempts to secure its finances.

However, this does not necessarily mean administrators will be appointed.

Mark Jackson, the chief executive of Wilko, 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.

“Unfortunately, with this in mind, today we’re having to take the difficult decision to file a [notice of intention to appoint administrators].”

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