People familiar with the situation say that UK value retailer Wilko Limited may enter into a “company voluntary arrangement” to renegotiate leases with landlords, and possibly close sites in order to reduce costs.
Wilko has approached financial advisers at PricewaterhouseCoopers in recent weeks, said the people, who asked not to be named discussing private information. The people who spoke to the firm said that they are looking at different restructuring options, including a CVA. A CVA is a type of UK insolvency proceeding which allows retailers to renegotiate with creditors.
Mark Jackson, Chief Executive Officer of Wilko, said, “We are in the early stages” of the turnaround. In an email response to questions, he did not elaborate on any potential CVA plans. PwC’s representative declined to comment.
The privately-owned retailer warned it may run out of money by the end this year, if business conditions worsen. According to its most recent financial accounts, the company plans to close 15 out of 413 stores by January 2022.
reported in earlier this year that Wilko had received a £40-million ($50-million) funding lifeline by Hilco UK. Hilco UK is the owner of Homebase, Cath Kidston and other brands.
Wilko has said that major supply chain disruptions, as well as a drop in footfall, have prevented it from “performing at its full potential”. The company was trying to boost their online offering to help with turnaround efforts.
The UK is experiencing a rise in inflation, which has made it difficult for many retailers. Recently, fashion chains Joules M&Co and Made.com as well as online furniture brand Made.com have gone into insolvency. Retailers warn that inflation will continue to rise.