British household and garden products retailer Wilko said it has fallen into administration on Thursday, a form of creditor protection, putting 12,500 jobs in danger if a buyer can’t be found.
The decision was made after the family-owned retailer had failed to secure emergency investment, following declining sales leading to cash problems.
“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,” Wilko Chief Executive Mark Jackson said.
Wilko, which sells everything from hardware goods to cleaning products, toys, and gardening equipment, operates some 400 stores across the U.K. and has an annual revenue of 1.2 billion pounds ($1.5 billion).
Mr. Jackson said Wilko’s had received “a significant level of interest,” including indicative offers sufficient to recapitalize the business.
However, “without the surety of being able to complete the deal within the necessary time frame and given the cash position, we’ve been left with no choice but to take this unfortunate action,” he said.
“We’ve all fought hard to keep this incredible business intact but must concede that time has run out and now, we must do what’s best to preserve as many jobs as possible, for as long as is possible, by working with our appointed administrators.”
Administrator PwC said Wilko’s stores would continue to operate as normal. There will be no immediate layoffs, while negotiations with interested parties continue.
However, the administrator warned: “If buyers for some or all of the group are not found, it is likely that store closures and redundancies will follow.”
Home-Shopping Technology ‘Reluctance’
GMB union officer Nadine Houghton blamed the company’s management for the current situation, citing their reluctance to invest in home-shopping technology.
“The 12,000 Wilko workers now facing potential redundancy will take little solace that with better management the situation that has befallen Wilko was, sadly, entirely avoidable,” she told The Guardian.
“GMB has been told time and time again how warnings were made that Wilko was in a prime position to capitalize on the growing bargain retailer market, but simply failed to grasp this opportunity.”
Ms. Highton also referred to the owners of the chain taking £3 million ($3.8 million) in dividends despite the company suffering a £37 million ($47 million) loss reported in February 2022.
The loss prompted the company to cut 400 jobs and reshuffle its management team, and to borrow £40 million ($51 million) from restructuring specialist Hilco, now believed to be a potential buyer.
Wilko started as a single hardware store in Leicester, in central England, in 1930.
It is Britain’s biggest retail casualty since convenience store chain McColl’s collapsed in May last year. McColl’s was subsequently bought by the supermarket group Morrisons.
Despite increasing interest rates and high inflation levels, most U.K. high-street chains have traded resiliently so far this year.
Reuters contributed to this report.