A rescue deal proposed by the owner of HMV that would have saved around half of Wilko’s stores and secured the future of thousands of jobs has collapsed.
Doug Putman, who engineered a turnaround of HMV in the UK and owns Toys R Us in Canada, had been negotiating a deal to save as many as 200 of Wilko’s 408 stores, throwing a lifeline to staff.
“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,” Putman said.
The deal ran into trouble earlier this month with some big suppliers, including Unilever and Procter & Gamble, which supply many staple household cleaning and food products, saying they want their debts repaid now in order to continue to guarantee supplying Wilko’s stores.
There were also concerns that some suppliers, which have cancelled shipments to Wilko’s stores as the chain went into administration last month, would not be able to ship products for another six weeks.
Putman subsequently moved to reduce his proposed deal from 300 to 200 stores but it is understood that talks have foundered as his plan was not able to chart a path to reduce central infrastructure costs quickly enough.
“We had financing in place and received the full support of [administrators]PWC, Wilko management and staff representatives, which we are deeply thankful for considering what a challenging time it has been for them,” Putman said.
“However, commitment to overhauling the trading framework of the business with partners and the costs of running Wilko’s legacy operations infrastructure combined has meant that 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.”
Administrators at PwC are still in talks about saving some of Wilko’s stores with other potential suitors including Poundland, Home Bargains and The Range.
Poundland is understood to be in talks to take on about 100 stores while The Range is seeking to acquire the Wilko brand, which was first reported by Sky News.
Last week, administrators announced the closure of 52 Wilko stores with the loss of more than 1,300 jobs.
A £13m deal struck by discount retailer B&M to save 51 properties will also result in extensive job losses, as the agreement only includes store premises and not jobs.
The retailer, which was founded in 1930 when JK Wilkinson opened his first store in Leicester, stepped into stores left empty when Woolworths collapsed in 2008.