Future of Wilko staff in limbo as deadline for bailout bid passes | Retail business

The future of Wilko’s 12,500 employees hangs in the balance as they wait to hear if a serious bidder for the discount chain has emerged.

Those interested in the household equipment brand, which has 400 stores, had until Wednesday evening to offer their best offers for the company, which called the admins last week because he was facing a lack of money.

It is expected that dozens if not hundreds of Wilko stores will have to close as a bid for the entire group as a going concern is unlikely to have been made, according to industry insiders.

A break from Wilko, which was founded in 1930 when JK Wilkinson opened its first store in Leicester, would leave holes in high streets across the country where the chain has stepped in to fill voids left by the Woolworths collapse end of 2008.

The full chain is expected to continue trading until at least next week as talks over the group’s asset severance are expected to drag on with an array of interest in aspects of the business from many parties. .

Administrators are negotiating with potential suitors including Poundland, B&M, Primark and Home Bargains for groups of up to 50 stores each. “It’s going to be a bit of a cutout,” said one real estate expert.

Bidders who could save the Wilko brand and at least part of the chain include Hilco, which holds £40m of the chain’s debt secured in part against the retailer’s brand name, owner of Bensons for Beds, Alteri, and Laura Ashley’s owner Gordon Brother, although it’s unclear if either of them have made a formal offer. British private equity group OpCapita has also been named as a potential suitor.

Danni Hewson, head of financial analysis at AJ Bell, said the location of Wilko’s outlets could prove a sticking point for some shoppers at discounters such as B&M.

“A huge selling point for companies like Home Bargains and The Range, which have been touted as potential suitors, is their out-of-town location with plenty of free parking, making it easy for buyers to shop bulk discounted products without worry. how they will bring their loot home,” she said.

As rescue attempts continue, the company has now halted click-and-collect online orders, having halted home deliveries last week as stocks in many stores begin to run low.

Wilko customers have expressed their anger about difficulties in obtaining information on refunds and deliveries after the group’s helpline and chat service closed last week. The helpline reopened this week and has been overwhelmed with inquiries from buyers.

The GMB union, which represents thousands of workers at Wilko, said it still believed there was a chance of reaching a bailout deal. Andy Prendergast, the union’s national secretary, said: “GMB is in talks with the trustees and there is still hope.”

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The union accused the company’s management of allowing the retailer to lose its place in the market by not investing in technology for home shopping and other improvements when “the money it badly needed was retired from the business” by the owning Wilkinson family.

The GMB said: ‘We are seeking clarification on pensions but we have concerns. The Wilkinson family withdrew tens of millions of dollars from the business in the decade before the collapse. If they really wanted to support workers, they should have invested in their staff.

The last reported shortfall for the group’s defined benefit pension fund was £16m, but the fund has a £20m security on Wilko’s property assets. John Ralfe, a pension expert, believes the hole in the fund has likely closed due to rising interest rates.

The family paid £3 million in dividends within 12 months to the end of February 2022 despite a loss-making year for Wilko Group, as first revealed by the Guardian.

They started investing in startups, supporting the British Design Fund and companies such as Unplugged, a company offering “digital detox retreats” near London. The Wilkinsons invested in self-driving delivery vehicle company StreetDrone in 2021.

Source link: https://www.theguardian.com/business/2023/aug/17/future-of-wilko-staff-in-limbo-as-deadline-for-rescue-bid-passes

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