Wilko set to disappear from high street as rescue deal collapses

A deal to acquire around 100 of homeware and garden retailer Wilko’s stores from administrators has collapsed. Canadian businessman Doug Putnam, owner of music retailer HMV, has ended discussions with administrators PwC over the drawn-out deal, with Wilko now set to disappear from high streets by early October.

Putnam had initially been in talks to acquire around 300 of Wilko’s 400 stores, with a deal reportedly agreed last month. However, the withdrawal of Putnam’s financial backer, Gordon Brothers, led to negotiations dragging on as he sought to reshape the deal.

Despite apparently being close to striking a reduced deal to acquire over a quarter of the retailer’s stores, Putnam has now ended talks, with Sky reporting that the deal collapsed due to the costs associated with taking on Wilko’s infrastructure.

In a statement, Putnam said: "It is with great disappointment that we can no longer continue in the purchase process for Wilko having worked with administrators and suppliers over several weeks to seek a viable way to rescue it as a going concern."

"A stable foundation could not be secured to ensure long-term success for the business and its people in the way that we would have wanted"

Around 1,600 Wilko staff have already been made redundant since the firm’s collapse into insolvency last month, with the latest development meaning that thousands more jobs from the firm’s workforce (which stood at around 12,500 prior to it entering administration) are now at risk.

Following the collapse of the Putnam deal, PwC are reportedly set to sell around 100 stores to bargain retail giant Poundland. Fellow value retailer B&M has already 51 of the firm’s stores, but these are expected to be rebranded as B&M stores. Another value chain, The Range, is reportedly in advanced talks to acquire the company’s brand and online assets.

Wilko fell into administration last month after failing to secure a buyer following a lengthy search for external investment. The company, which was founded in 1930, had been severely hit by inflation and supply chain disruption, having previously been heavily impacted by the COVID-19 pandemic.

In its accounts for the year ending January 29 2022, the company reported total sales of £1.2 billion, down £42 million from a year earlier, while its EBITDA fell to £15.6 million, compared to £48 million a year prior. This decline saw the company fall from a pre-tax profit of £5.5 million to a £38.7 million pre-tax loss. Its net assets at the time were valued at around £99.5 million.

Commenting in the wake of the Putnam deal collapsing, Hargreaves Lansdown’s head of money and markets Susannah Streeter said: "Wilko faces disappearing from the high street after a rescue bid to save the name and a vast chunk of stores appears to have collapsed.”

She added: "B&M has already swooped into the bargain bin and picked up 51 stores from the administrators PwC and it's likely that other value chains may still be hovering, ready to hoover up a handful of other outlets in cut-price deals.”

"There is a chance that the brand itself may survive but as a range on another retailer’s shelves, and further deals are rumoured to potentially be announced this week.”


Find out more about M&A in the UK's retail sector - including an analysis of Wilko's collapse

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