Wilko rescue deal fails sparking huge job loss fears

Date:

  • By Lora Jones & Emma Simpson
  • BBC Business

A rescue deal for High Street chain Wilko has collapsed, leaving the future of thousands of jobs uncertain.

The billionaire owner of HMV, Doug Putman, hoped to keep up to 300 Wilko shops open, but his bid failed as rising costs complicated the deal.

It leaves the future of more than 10,000 workers and hundreds of stores uncertain.

Some of Wilko’s remaining stores could be sold to rival retailers, such as Poundland or The Range.

Administrators are expected to announce the details of job losses and store closures in the coming days.

The cash-strapped chain announced in August it had collapsed into administration, raising concerns over the futures of its 12,500 workers.

Another 299 redundancies have taken place at its two distribution centres in Worksop and Newport, while more than 260 redundancies have been made at its support centre.

Proposals put forward by Canadian entrepreneur Doug Putman were hampered by the costs and difficulties thrown up by the need to overhaul Wilko’s supply chains.

He had originally been eyeing up to 300 shops, but the deal in its most recent form may have included about 100.

Day-to-day costs to keep everything running, rents and supplier contracts were also posing a challenge.

In a statement, Mr Putman said: “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.

“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,” he added.

After the collapse of Woolworths in 2008, Wilko – family-run until its problems came to a head – stepped up to fill the gap left on the High Street.

Founded in 1930 and well known for its affordable everyday items, it had been struggling with sharp losses and a cash shortage.

Nadine Houghton, national officer at the GMB union, said that workers had been dealt “another devastating blow” on Monday.

“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.”

One Wilko worker, who asked not to be named, told BBC News on Monday morning that staff still had not been been given any official information on the future of their store.

“I feel sick and tired now, everyone is stressed,” she said.

The employee, who has worked for the retail chain for 15 years, added that she felt “let down by Wilko, the union and the administration people”.

The company has struggled with strong competition from rival chains like B&M, Poundland, The Range and Home Bargains, as the high cost of living has pushed shoppers to seek out bargains.

B&M has said it will take on up to 51 of Wilko’s 400 shops in a deal worth £13m, although it hasn’t confirmed yet whether any jobs will be saved as a result.

Many Wilko shops are in High Street locations in traditional town centres. While these locations are convenient for shoppers without cars, since the pandemic there has been a shift to bigger retail parks and out-of-town options with more space, benefiting its rivals like B&M.

Poundland is also understood to be interested in buying dozens of stores as a way of boosting its own portfolio.

The Wilko brand is also still up for grabs, with retailers including The Range proposing bids for the name.

Wilko had already borrowed millions from restructuring specialist Hilco, cut jobs and rejigged its leadership team and sold off a distribution centre as it struggled with rising costs and keeping shops fully stocked.

Lisa Wilkinson, the retailer’s chairwoman until January this year and the granddaughter of the firm’s founder, recently said “everybody has thrown everything” at trying to save the business.

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