Budget retailer Wilko has warned it plans to appoint administrators in a move that could put 12,000 jobs at risk.
The household and garden products retailer, which has about 400 stores, said in a notice of intention filed at the high court on Thursday that it had appointed advisory firm PricewaterhouseCoopers to try to find a buyer in recent months in a bid to secure the additional cash to keep trading.
The cut-price retailer has struggled amid the tough economic climate and last year borrowed £40m from restructuring specialist Hilco. It also cut jobs and rejigged its leadership team as it faced a cash squeeze after falling to a loss, and needed to find new funds by the end of this month.
Sales had fallen as the retailer faced gaps on shelves after struggling to pay suppliers after at least one credit insurer withdrew cover for the retailer, prompting some suppliers to pause deliveries.
A notice of intention protects a business from creditors for ten days in order to give it time to secure its finances. The notice does not necessarily mean that administrators will be appointed.
Mark Jackson, the chief executive of Wilko, said: “While we can confirm we’ve had a significant level of interest, including indicative offers that we believe would meet all our financial criteria to recapitalise the business, at present, we don’t today have an offer that provides the necessary liquidity in the time we have available, given the mounting cash pressures we’re faced with.
“Unfortunately, with this in mind, today we’re having to take the difficult decision to file a [notice of intention to appoint administrators].”
Jackson said that the business would continue to hold discussions with interested parties and would aim to secure its future “as fast as possible”.
“We continue to believe that our robust turnaround plan, with significant re-stabilisation cost savings in progress, will deliver a profitable Wilko and maximise the significant opportunities that we know exist,” he said.
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