An agreement to save the department store chain Wilko has fallen through, leaving the future of thousands of jobs uncertain. Doug Putman, the billionaire owner of HMV, planned to keep 300 Wilko stores open, but his bid failed due to rising costs that complicated the deal.
The future of over 10,000 employees and hundreds of stores is uncertain. Some of Wilko's remaining stores may be sold to competitors like Poundland and The Range.
In the coming days, administrators are anticipated to declare the specifics of job cuts and store closures.
The cash-strapped chain declared in August that it had entered administration, causing concern for its 12,500 employees. Administrators at PwC have already announced that some 1,016 redundancies would be made at 52 stores across the country that will close on Tuesday and Thursday this week.
Costs and challenges posed by the need to overhaul Wilkos supply chains prevented Canadian entrepreneur Doug Putman from advancing his ideas. Initially, he was interested in up to 300 stores, but the most recent agreement may only involve 100.
In addition to day-to-day operating expenses, rents and supplier contracts posed a problem.
Mr. Putman stated in a statement that it is with great regret that they are unable to continue with the purchase of Wilko after working with administrators and suppliers for several weeks to find a viable means to save it as a going concern.
They were unable to secure a stable foundation to ensure the company's and its employees' long-term prosperity. Wilko, which was family-owned until its problems reached a head in 2008, stepped in to replace the void left by Woolworths on the High Street.
The company, which was founded in 1930 and was well-known for its inexpensive everyday items, was struggling with steep losses and a cash shortage.
Monday, according to Nadine Houghton, national officer of the GMB union, workers were dealt "another devastating setback."
Monday morning, a Wilko employee who wished to remain anonymous told sources that employees had not been given any official information regarding the future of their store.
The 15-year employee of the retail chain added that she felt let down by Wilko, the union, and the administration personnel. As a result of the high cost of living, rival chains such as B&M, Poundland, The Range, and Home Bargains have provided formidable competition for the company.
B&M has announced that it will acquire up to 51 of Wilko's 400 stores in a deal worth £13 million, although it has not yet confirmed whether this will save any employment.
It is believed that Poundland is interested in purchasing up to 70 stores in order to expand its portfolio. The Wilko trademark is also still available, with retailers such as The Range submitting offers for the name.
Wilko had already borrowed millions of dollars from restructuring expert Hilco, cut jobs and restructured its leadership team, and sold a distribution center as it struggled to keep its stores stocked amid mounting costs.
Lisa Wilkinson, the retailer's former chairwoman and the granddaughter of the company's founder, stated recently that "everyone has tried everything" to save the company.