Wilko's goes into Administration

[Peter Sarf]

The Addo one is really quite horrible. The one in the Whitgift is pretty much the same, with the added bonus of being in a dark corner of the centre long devoid of any other shops. I thought neither of these stock clothes but it might have changed recently. The one on Church street is the better one and has limited clothes but not that brilliant either.

If I was Poundland id shut down both the central ones and instead open a merged together big branch in one of the numerous larger empty retail units sitting about.

For home stuff poundstretcher or that independent one next to the McDonald's is better, for DIY just go to Wickes or Screwfix

The Poundland sort of opposite M&S is a pokey little place always with a queue for the one manned till and stock all over the floor. It mainly suffers from being up the grotty end of Croydon.

The one near McDs in Church Street is "Sam 99p", I find that has a different range to the others,

There is also the "Poundworld" on the entrance to Centrale which always seems a mess.

Of the next level up Croydon only has Poundstretcher. No B&M or Home Bargains.

On the next level up we don't have Wilkos !.

 

[Citybreak1]

£90 million seems a decent offer for Wilko. I’m sure I read they could only make around £40 million from liquidation and property assets. All jobs could be secure for 2 years too.

 

[Snow1964]

£90 million seems a decent offer for Wilko. I’m sure I read they could only make around £40 million from liquidation and property assets. All jobs could be secure for 2 years too.

The way I saw it reported is they have pledged to retain all employees jobs, in other words wouldn't be redundancies within 2 years, which is different as means people leaving might not be replaced, and anyone on a zero hours contract, might find they get offered zero hours. Casual or seasonal workers might not not be deemed employees.

Sort of leaves door open to shut some stores and tell people they need to move to another branch. Devil will be in detail which hasn't been made public.

But you can bet they are not doing it for charitable reasons, but to break it up and sell best bits, make a profit then dump remainder.

 

[Dai Corner]

The way I saw it reported is they have pledged to retain all employees jobs, in other words wouldn't be redundancies within 2 years, which is different as means people leaving might not be replaced, and anyone on a zero hours contract, might find they get offered zero hours. Casual or seasonal workers might not not be deemed employees.

Sort of leaves door open to shut some stores and tell people they need to move to another branch. Devil will be in detail which hasn't been made public.

But you can bet they are not doing it for charitable reasons, but to break it up and sell best bits, make a profit then dump remainder.

Which is basically what the current and previous management should have done; retained the profitable bits and got rid of the rest. That's really difficult for a family run firm though. The last chair of the Board was the founder's granddaughter.

 

[Citybreak1]

The way I saw it reported is they have pledged to retain all employees jobs, in other words wouldn't be redundancies within 2 years, which is different as means people leaving might not be replaced, and anyone on a zero hours contract, might find they get offered zero hours. Casual or seasonal workers might not not be deemed employees.

Sort of leaves door open to shut some stores and tell people they need to move to another branch. Devil will be in detail which hasn't been made public.

But you can bet they are not doing it for charitable reasons, but to break it up and sell best bits, make a profit then dump remainder.

I’m sure they have about 6 branches in Leeds. Surprised they need so many. Yet Scotland only has ten yet other bargain retailers heavily expanded up here. Surely the new owner might what it shift a few to retail parks too.

 

[Annetts key]

I’m sure they have about 6 branches in Leeds. Surprised they need so many. Yet Scotland only has ten yet other bargain retailers heavily expanded up here. Surely the new owner might what it shift a few to retail parks too.

I’ve been in plenty of “retail park” stores which are actually less busy compared to a main city or town store (not talking about Wilko specifically here, but rival or other stores). In one, I was the only potential customer, so half of the (small number of) staff watched me browsing… In another, three people (all the customers currently in store including me) queued for about five minutes because there was no one at the checkout tills…

So it most definitely varies depending on time of day and where the store is.

 

[Cloud Strife]

Which is basically what the current and previous management should have done; retained the profitable bits and got rid of the rest. That's really difficult for a family run firm though. The last chair of the Board was the founder's granddaughter.

A lot of family run firms run into the same problems when they get to a certain size. I have a friend who built his company from nothing up to several hundred staff, and one day, he sat down and had a long deep think about the company. He looked at the organisational charts, crossed out perhaps half of the supervisors, managers and directors, then realised that he simply didn't have it in him to get rid of people who he'd known for many years. Yet they were dead wood, and clearly holding the company back.

 

[Peter Sarf]

A lot of family run firms run into the same problems when they get to a certain size. I have a friend who built his company from nothing up to several hundred staff, and one day, he sat down and had a long deep think about the company. He looked at the organisational charts, crossed out perhaps half of the supervisors, managers and directors, then realised that he simply didn't have it in him to get rid of people who he'd known for many years. Yet they were dead wood, and clearly holding the company back.

I growing business is always an exciting place to be. Then when the growth stops it is time to look at all the rushed decisions to cope with growth. I have seen it a couple of times. When managers are asking me to make many estimates for work but none of them go ahead I know cutbacks are inevitable. As you say - harder when it is a familly run business or where the higher mangemant know everyone.

I think a venture capital operation or US buyer on the other hand - mercenary. I have watched Morrisons go down hill now it is no longer family owned. Reduced staff saw morale drop, next frozen/chilled stock left all day in the isles not on shelves, outstanding repairs. We have had to stop buying our milk there as too often it now goes off before the use by date !. So I wonder if Morrisons is on trouble ? - probably not if those running it can screw a profit out of it for the financiers.

 

[jfollows]

The BBC reports (https://www.bbc.co.uk/news/business-66668569) that the proposed deal for "M2 Capital" (see post 114 and subsequent discussion) to buy Wilko for £90m has come to nothing.

Wilko deal to buy firm and save jobs falls through​

• • Published
    9 minutes ago

By Michael Race
Business reporter, BBC News

A deal to buy Wilko, which claimed to guarantee jobs for the next two years, has fallen through after a bidder failed to file paperwork in time.
Private equity firm M2 Capital said it made a £90m bid for Wilko but was unable to provide proof of funding.
The process of making redundancies at the retailer will now resume.
But it is understood that PwC, which is overseeing the sale of Wilko, is still in talks with HMV owner Doug Putman about a deal.
Wilko fell into administration in August putting 12,500 jobs at risk across 400 shops. It also has two distribution centres and a head office.
M2 Capital claimed at the weekend that it would retain all employees' roles for two years.
However, it is believed that the private equity firm was unable to provide proof of funding for its bid to administrators at PwC prior to a deadline on Wednesday.
During a conversation littered with expletives, M2 Capital chairman Robert Mantse told the BBC that his dealings with the administrators had been a "circus" and accused PwC of being "beyond unfair".
He said M2 is now considering legal action. Asked what his next steps would be, Mr Mantse replied he was "going to lunch with a very pretty girl".
Job cuts at Wilko were suspended in recent days as PwC considered M2 Capital's bid for the entire business, which was submitted last week.
Administrators have previously said discussions have been ongoing with parties interested in buying parts of the retailer.
There has been speculation that Wilko's rivals, such as B&M, Poundland and The Range could be interested in the firm.
Those retailers, along with Home Bargains, have created strong competition for Wilko in recent years as the high cost of living has pushed shoppers to seek out bargains.
Poundland and B&M declined to comment.
Many of Wilko's stores are also on High Streets in traditional town centres, which became an expensive liability as customers shifted to bigger retail parks and out-of-town locations.

Essentially the buyer couldn't provide proof of the money in time for a deadline.
The Guardian (https://www.theguardian.com/busines...-head-office-warehouses-90m-bid-falls-through) also:

Wilko job cuts to begin this week after £90m bid falls through​

About a third of 1,400 staff at stricken retailer’s head office and warehouses expected to be made redundant
Sarah Butler
@whatbutlersaw
Thu 31 Aug 2023 11.57 BST
Job cuts at Wilko’s head office and warehouses are expected to begin this week after a surprise £90m bid for the discount retailer fell through.
It is understood that about a third of the 1,400 staff at the group’s headquarters and distribution centres are to be made redundant after talks with M2 Capital collapsed because a failure to provide proof of funding.

Talks on a rival bid from the HMV owner, Doug Putman, continue. It is understood that he does not want to hold on to Wilko’s back-office function, only the brand and its stores.
Almost 12,500 jobs are at risk after Wilko called in administrators this month as it ran short of cash.
M2 is a little-known Anglo-Canadian finance group that has set up funds to buy hotels and car parts makers but has yet to complete any deals. It is the only bidder that has pledged to take on Wilko’s support staff as well as its shops. However, it has not satisfied administrators that it has the necessary backing to do so.

The private equity firm has reportedly been in discussions about financing the deal with Michael Flacks, an entrepreneur who owns a diverse array of businesses including the US retailer Kelly-Moore Paints, the skin brushing brand Non Nonsense Beauty and the pump maker Aldrich. He once looked at buying the British brand Laura Ashley.
However, Flacks told the Sun he had only heard from M2 this week: “I replied saying I have no interest in Wilko and I don’t back anyone’s business,” he told the newspaper.
In a letter to the chair of M2, Robert Mantse, seen by the Guardian, representatives for Wilko’s administrators at PricewaterhouseCoopers asked for “clarification as to the status of your interest” including “proof and source of funds, which is satisfactory to us” by 5pm on Wednesday.
A source close to the process has questioned the credibility of the M2 bid, which was put forward very late on the final day for offers on Friday and included a 20% stake in the business for employees.
Mantse responded: “Money talks and bull**** walks.”

 

[Towers]

Which is basically what the current and previous management should have done; retained the profitable bits and got rid of the rest. That's really difficult for a family run firm though. The last chair of the Board was the founder's granddaughter.

Presumably this is a big part of the problem…

 

[Citybreak1]

Hmv close to buying them. Said he would combine the business could we see Hmv concessions in Wilko shops?

 

[skyhigh]

Hmv close to buying them.

The owner of HMV has expressed an interest in buying them.

 

[Peter Mugridge]

The owner of HMV has expressed an interest in buying them.

Not the whole chain, though - 300 of them.

The administrators are saying redundnacies are continuing from tomorrow, which presumably involves shops that are not in that 300.

 

[skyhigh]

Not the whole chain, though - 300 of them.

The administrators are saying redundnacies are continuing from tomorrow, which presumably involves shops that are not in that 300.

The article I read suggested the redundancies would be in the distribution/supply chain side of the business.

I hope I'm wrong, but I suspect it's too late to save the company long-term. A lot of back office stuff will have stopped, and they've been flogging off all their Christmas stock on the cheap. If the company is bought and continues to trade, will they have anything to sell in the key Christmas period? It'll be too late to order replacement stock now. I fear that someone buying the chain will just prolong the inevitable demise.

 

[Xenophon PCDGS]

I wonder how much large premises in town centres cost the company. Two that I know in such situations are those in Altrincham and in Wythenshawe.

 

[lookapigeon]

I wonder how much large premises in town centres cost the company. Two that I know in such situations are those in Altrincham and in Wythenshawe.

A lot of money! Here's a local shopping centre with a number of shops for let. https://www.loopnet.co.uk/Listing/Commercial-Way-Woking/28625529/

If we take one of the larger sized but not Wilko sized spaces (e.g. Unit 19) your bare initial costs for the year are £45k rent, 24k service charge plus VAT. There's the rates of 30k.

That's before you've even covered your costs for staff, insurance, utilities, fit out, legal fees etc.And then there's the issue of making profit...

 

[Snow1964]

Trowbridge (Wiltshire's county town) has 2 shopping centres, an old one called Castle Place, where most of shops are empty, but did have a Wilko. Apparently even though contracts were exchanged, sale of whole shopping centre has collapsed since Wilko went into administration

Castle Place shopping centre up for sale again as deal falls through

A key shopping centre in Wiltshire is up for sale again after the deal with a would-be purchaser fell through despite contracts being exchanged.

www.wiltshiretimes.co.uk

Castle Place shopping centre in Trowbridge was sold prior to an online auction in May for around £1.2 million after attracting interest from more than 100 parties.

The centre could soon lose its flagship store, Wilko, with the national chain recently collapsing into administration and continues to try and find a buyer.

 

[Citybreak1]

I think they are going to struggle. Seems to be rumbling on. My instinct says they will sell to Poundland and other rivals. It’s easier to restock HMV I can’t see Wilko being saved now. Bad news but no doubt many of these stores will remain empty for years.

 

[skyhigh]

My instinct says they will sell to Poundland and other rivals.

I can't see it personally. Wouldn't it be cheaper for them to expand their offering the way they want it rather than buying up bits of a defunct competitor?

 

[Citybreak1]

I can't see it personally. Wouldn't it be cheaper for them to expand their offering the way they want it rather than buying up bits of a defunct competitor?

Poundland seem to be opening larger shops these days with Pep and co inside maybe a few upsizing and relocations. Didn’t they buy out 99p stores a good few years back?

 

[david1212]

I wandered into my local Wilko yesterday. Most items now discounted at least 20% except toiletries 10%. Quite a lot had gone e.g. DIY and stationary with the remaining stock further spread out to fill the shelves e.g. a lot of throws / blankets. Halloween and Christmas discounted 30 - 50% so the doors could close at the end of the month.

No stock of anything I wanted so what ever I last bought a while ago may well have been my last Wilko purchase, I would have bought more over the last few months if they had stock .......

I think they are going to struggle. Seems to be rumbling on. My instinct says they will sell to Poundland and other rivals. It’s easier to restock HMV I can’t see Wilko being saved now.

Based on the above I agree that restocking will be an issue for a buyer, certainly too late for Christmas then January - Easter is a lean trading period. I wonder if Poundland will be interested as there can not be many places with a Wilko but no Poundland. At best they may take some units if no nearby store or a better location.

Bad news but no doubt many of these stores will remain empty for years.

They are the last big store on the lower floor of the shopping centre. The unit could be divided as before Wiiko it was at least two units. However there already are several empty units .......

Poundland seem to be opening larger shops these days with Pep and co inside maybe a few upsizing and relocations.

Localish to me two have expanded into the adjacent unit, with the current lack of demand for retail premises perhaps the best option for the owners is a deal with Poundland.

Didn’t they buy out 99p stores a good few years back?

Yes, some where no Poundland have carried on, some become a Pep and some that were rebranded have since closed.

 

[skyhigh]

Didn’t they buy out 99p stores a good few years back?

That was quite a long time ago.

More recently in 2018 Poundworld went into administration but Poundland just opened some branches in ex-Poundworld stores. They didn't take any of the business as far as I know.

 

[Xenophon PCDGS]

I decided to visit the Wilko large store in Wythenshawe Town Centre last Saturday and all-around the store were large placards stating "Administration Sale". They still seemed to have a large stock of school stationery items which were selling well when I was there, with the return to school imminent. I must confess to buying far more in the male deodorant section which were very competitively priced against what the Boots store were charging.

 

[Citybreak1]

That was quite a long time ago.

More recently in 2018 Poundworld went into administration but Poundland just opened some branches in ex-Poundworld stores. They didn't take any of the business as far as I know.

Yes that’s true One Beyond took on many of these and Poundstretcher. One Beyond is from ex Poundworld owner. I believe the administrators were just as difficult and wouldn’t sell with Poundworld that’s why he had to set up a new company.

 

[jfollows]

B&M “saves” 51 stores for £13m but that just looks like pragmatic opportunism to me.

 

[Mojo]

B&M “saves” 51 stores for £13m but that just looks like pragmatic opportunism to me.

l agree; it also isn’t a “saving” of shops as B&M and Wilko also sell different products.

 

[skyhigh]

B&M “saves” 51 stores for £13m but that just looks like pragmatic opportunism to me.

l agree; it also isn’t a “saving” of shops as B&M and Wilko also sell different products.

The Wilko stores are being 'saved' in the same way as Bernard Matthews would save turkeys. From what I've read there are no guarantees for the staff employed at these stores, at most I imagine they will be retained on B&M pay and conditions. Some stores may be larger/better sited replacements for existing branches and so not require the existing Wilko staff. There's also no reprieve for any of the distribution/back office staff who would have supported these 51 stores.

I imagine (other than locations where it would introduce duplicates nearby) B&M have picked the best of the sites which means that the remaining rump are less attractive for any prospective purchaser. It also looks to me as if it indicates that the deal with the HMV owner isn't progressing.

 

[Citybreak1]

I believe over 50 are closing but no closure list I assume it’s the stores they sold today?

 

[tomuk]

The Wilko stores are being 'saved' in the same way as Bernard Matthews would save turkeys. From what I've read there are no guarantees for the staff employed at these stores, at most I imagine they will be retained on B&M pay and conditions. Some stores may be larger/better sited replacements for existing branches and so not require the existing Wilko staff. There's also no reprieve for any of the distribution/back office staff who would have supported these 51 stores.

I imagine (other than locations where it would introduce duplicates nearby) B&M have picked the best of the sites which means that the remaining rump are less attractive for any prospective purchaser. It also looks to me as if it indicates that the deal with the HMV owner isn't progressing.

It is very sad situation for the staff and hopefully some of the money raised by the administrator can cover proper redundancy costs but in lieu of a government bailout it is just capitalism in action.

 

[Mojo]

Went into Wilkinsons in Hammersmith this afternoon. Very depressing with the shelves largely empty except for the former cleaning aisle which was full of hundreds of ugly green throws at an extortionate £18.

They had loads of bags of mealworms which was ironic as they have been hard to get hold of for much of the last year. Got as many as my bag could hold as the ducks love them and even without 10% off Wilkinsons is the cheapest shop for them.