Home Business Why did Wilko collapse? What happened to Wilko and when will the last stores close?

Why did Wilko collapse? What happened to Wilko and when will the last stores close?

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Why did Wilko collapse?  What happened to Wilko and when will the last stores close?

All 12,500 employees at bankrupt retailer Wilko will lose their jobs after talks to save hundreds of stores collapsed.

The high street chain fell into administration in August, more than 90 years after it began as a single hardware store in Leicester.

The closure of the company’s remaining 400 stores and the loss of 9,100 employees were confirmed on Monday by PwC administrators after attempts to save the business came to an end.

We look at what led to Wilko’s collapse and what the future still holds for its stores and employees.

– What is Wilko?

Wilko was founded by James Kemsey Wilkinson in 1930, who opened the company’s first store on Charnwood Street in Leicester under the Wilkinson Cash Stores brand.

By 1941 it was known simply as Wilkinsons and grew as a hardware chain on the high streets of the United Kingdom.

The company, which simplified its name to Wilko in 2014, has grown to around 400 stores and employs 12,500 people both in its stores and at its Worksop headquarters.

As well as expanding its number of stores, the company has also increased the range of products it sells, such as sweets and garden furniture, in addition to its traditional DIY products.

– When did you start facing financial problems?

The retailer had remained strong for many years despite wider challenges on the UK high street, growing as rivals such as Woolworths suffered financial problems.

Wilko posted strong profits for most of the 2010s and saw its turnover peak at more than £1.6bn in 2018, but by that time profitability had started to decline amid pressure on the streets. main.

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Turnover has declined every year since, as challenges in the sector were compounded by the Covid-19 pandemic and tighter consumer budgets in the face of higher energy costs and mortgage rates.

Company administrators at PwC said these factors contributed to “cash flow pressure and deteriorating operations.”

– Why did you see fewer buyers?

Wilko also saw shopper numbers decline as it faced increased competition from rivals such as B&M and Home Bargains.

These stores have continued to grow and shoppers are flocking to their stores, which are often located in out-of-town retail parks.

Retail parks have seen a sharp increase in recent years to the detriment of many high streets, where Wilko has the vast majority of its sites.

Phones 4U founder John Caudwell also said it was “not surprising” that Wilko faced weaker consumer demand due to a challenging economic climate.

He said: “People and businesses are facing difficult times as a result of inflation, the post-pandemic situation and the war in Ukraine, so difficult times are ahead and they are not going to get easier any time soon.

“That said, it’s surprising that a company like Wilko is struggling because a DIY environment tends to thrive a little more in tough times because people tend to do things themselves.”

– Were your stores too big and in the wrong places?

Retail analyst Richard Hyman told the PA news agency that the retailer’s store space has also been a drag on its recent trading activity.

“The stores they have are a burden and mostly too big,” he said.

“They have an excess of space where they sell a wide variety of products that they probably shouldn’t sell to begin with, extending into all kinds of different markets.

“They are quite large for many high streets, so they have the costs of rent and rates associated with them, but they also don’t have the practicality of, say, retail parks.

“There is no parking next to many of these stores, so for many people it doesn’t make sense to go there to buy large quantities of paint or other basic things like what they sell.”

– When will the remaining stores close?

Staff at 124 stores were told on Monday that those sites will close on or before Thursday, September 21, and PwC administrators have said the remaining stores would close in early October.

The company’s two warehouses will also close and most activities at its support center will cease, PwC said.

Most of the warehouse’s remaining 886 employees will be laid off on Friday and the 210 support center employees will remain retained until early next month.

– What attempts were made to save the Wilko stores?

PwC administrators held talks with a number of interested companies, some of which wanted to buy some of the stores, while others were interested in the rights to the company name.

The main hope rested with HMV owner Doug Putman, who had been in talks to take over around 200 stores as a “going concern”, but no deal could be reached due mainly to “infrastructure” costs.

– What will happen to the stores?

PwC has reached a deal with rival B&M to buy 51 Wilko stores and Sky News has reported that Poundland is in talks to buy around 100 stores.

The Range and Home Bargains are understood to be interested in buying the brand and some stores, but the GMB union has said bidders are only interested in the property and not the workers.

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