Wilko has entered administration after a rescue deal failed and more than 400 stores around 12,000 jobs are affected.
The budget retailer announced to their staff on Thursday that administrators from PwC have been hired to oversee the process.
Mark Jackson, chief executive officer of Wilko said in a letter, “Over the past six months Wilko has been very open that we’ve been considering options to accelerate a turnaround plan given that we needed to make significant changes to the way we operate to restore confidence and stabilise our business.
“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.
“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.”
Nadine Houghton, national officer at the GMB union, said, “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.
“GMB has been told time and time again how warnings were made that Wilko was in a prime position to capitalise on the growing bargain retailer market, but simply failed to grasp this opportunity.”
Sean Moran, insolvency partner at law firm, Shakespeare Martineau, said, “Another iconic British high street staple has fallen victim to market forces. The appointment of administrators appears to rule out a rescue of the Wilko business and now attention turns to the strategy they will pursue to maximise value for the company’s creditors. This might involve a sale of more profitable leases and/or other parts of the business.
“Whilst not unexpected, Wilko’s administration will send shockwaves through the Great British retail sector with the possibility that as many as 12,000 people will face job losses. It’s now down to the administrators to start the painful process of extracting any remaining value from a business that has had a presence in the UK for nearly 100 years.
“The collapse shows that even the biggest discount stores aren’t immune to the economic crisis with retailers struggling as customers tighten their belts. Wilko has been fighting for some time now against more agile high street competition in the discount space, just last year borrowing £40 million from the restructuring specialist, Hilco.
“Unfortunately for Wilko, like so many others, economic uncertainty has led to a string of retail casualties, including many businesses the everyday customer would expect to see lighting up the high-street. Research from Shakespeare Martineau suggests that the retail sector accounts for 16% of administrations within the UK, an enormous 118 filling for administration between the 1st of January and 30th of June 2022, quickly replacing construction in the hot spot for losses. These figures are only likely to get worse.
“The retail sector remains volatile, with significant losses such as House of Fraser, Topshop and Paperchase all having closed their doors. If there is anything for high street operators to learn from this, it’s to seek advice from experts as soon as the warning signs appear. Failing to act quickly and adapt to a changing marketplace is a fast-track route to burying the business.”