The discount retailer Wilko has borrowed £40m from restructuring specialist Hilco and rejigged its leadership team as it faces a cash squeeze after falling to a loss and struggling to pay suppliers.
Lisa Wilkinson, a member of the family which controls the 400-plus store chain, is stepping down as chair to be replaced by the former Bensons for Beds chair Chris Howell. Another former Bensons executive, Mark Jackson, stepped in as chief executive before Christmas, the group’s third in three years. The managing director, Alison Hands, will also leave the company this month about 18 months after taking the job.
Wilkinson said the company was making “necessary changes” to restore confidence and safeguard the future of the business.
“That includes making sure we have the right leadership in place – one aligned team with the right expertise to deliver the retail experience our customers are demanding of us today,” she said.
The two-year credit facility with Hilco, which specialises in providing financing for healthy and distressed companies, comes after Wilko paid down some of its debts by selling and leasing back its distribution centre in Worksop, Nottinghamshire, for initial proceeds of £48m.
Hilco has also backed the Derbyshire-based ceramics firm Denby and the retailers Cath Kidston and Homebase, as well as previously owning HMV and Habitat.
Wilko warned in its annual accounts, published in November, that it might have to seek additional financing if it suffered a “severe but plausible” scenario in which it saw a significant reduction in the amount of goods it was selling. In such an eventuality it said its available facilities “would be extinguished by December 2023”.
The Guardian understands that at least one credit insurer had withdrawn cover for the retailer, prompting some suppliers to pause deliveries. Wilko told suppliers in a meeting before Christmas that it was “debt free” but did not have sufficient funds to pay them upfront.
While some discount chains, such as Aldi, Lidl and B&M, have benefited as UK householders have searched for ways to save cash as they face a squeeze on their budget from rising energy and food bills, Wilko has found life tougher.
The group slid to a £36.8m pre-tax loss in the year to the end of January 2022 from a £2.5m profit a year before, after a near 3% fall in sales to £1.3bn. Despite that, Wilko paid its owners, led by the Wilkinson family, £2.25m in the year to the end of January last year and a further £750,000 in February.
The group told suppliers before Christmas it was struggling to keep some items in stock partly because of labour shortages in warehouses and difficulties in securing goods from suppliers.
