Wilko in administration
The business news that matters
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Hello and welcome to the latest Off to Lunch…
The discount retailer Wilko has fallen into administration, putting 12,000 jobs at risk.
PWC has been appointed as the administrators and all of Wilko’s shops will stay open for now
Wilko, previously known as Wilkinsons, opened its first shop in Leicester in 1930. The business is still owned by the Wilkinson family and has 400 shops across the UK.
Wilko had filed a notice to appoint administrators last week, which gave it time to try to find a rescue deal, but it has not been able to secure a buyer.
Mark Jackson, the chief executive, has published an open letter about the administration on the company’s website…
The letter says:
“Over the past six months Wilko has been very open that we’ve been considering options to accelerate a turnaround plan given that we needed to make significant changes to the way we operate to restore confidence and stabilise our business. We left no stone unturned when it came to preserving this incredible business but must concede that with regret, we’ve no choice but to take the difficult decision to enter into administration.
“We’ve a history steeped in serving customers and communities going back to 1930. Our founder JK Wilkinson started with a single hardware shop in Leicester and for over 90 years busy, hard-working families have come to us to get their household and garden jobs done quickly, simply and at the best value prices possible.
“We thrived and successfully grew from one to 400 stores. We did this by listening to our customers – working out what they needed and then making sure we gave it to them. Whether it was recognising the demands for DIY products in the 1950s, creating our first Wilko product range in the 1970s, launching online shopping in the 2000s or being the first to sell 100% plastic-free wipes across our whole range.”
It adds:
“While we can confirm we had a significant level of interest, including indicative offers that we believe would meet all our financial criteria to recapitalise the business, without the surety of being able to complete the deal within the necessary time frame and given the cash position, we’ve been left with no choice but to take this unfortunate action
“I’d like to take this opportunity on behalf of the directors and the Wilkinson family to thank all of our customers, suppliers, partners and our hardworking team members across our stores, logistics and support centre who remained loyal to Wilko. We’ve all fought hard to keep this incredible business intact but must concede that time has run out, and now we must do what’s best to preserve as many jobs as possible, for as long as is possible, by working with our appointed administrators.”
You can read the letter in full here
The collapse of Wilko is a blow to town and city centres already struggling to fill or repurpose empty shops. The demise of Wilko is the biggest failure in the retail industry since Sir Philip Green’s Arcadia and Debenhams went into administration in late 2020.
For a sense of what it is like being inside a retailer battling to avoid collapse, I recommend reading an excellent new piece by retail executive Ian Shepherd, the chairman of Bensons for Beds and former chief executive of Game.
He writes:
“I think it was Hemingway who said that bankruptcy happens two ways - gradually, and then suddenly - and that is certainly true. You might have experienced a few years of disappointing trading, seen your share price drop in response to missed forecasts and generally had a fairly miserable time of it, but for most of that period there has at least been hope. You have a turnaround strategy, you are pulling all the levers that you think you can and (for at least a while) your shareholders and lenders are supportive - they can see that is at least some plausible restructured future for your business and they want you to get there.
“But then, suddenly, it all changes. A key lender, in response to a failed covenant test on their debt, suddenly wants to meet you, in their offices, tomorrow. A credit insurer, spooked by bad press, announces they are pulling cover from suppliers to your business. A key supplier, perhaps with US shareholders who are both very conservative about risk and very litigious, decides to withhold their products. In response to any or all of these, the share price drops even further and the journalists start their ‘where did it all go wrong pieces’. Your mum calls you - suddenly worried by the story in her daily paper about your business. Your colleagues also start asking questions - if you run a retail business, you suddenly start getting direct emails from store teams asking what all this coverage means for their store and their jobs.”
Shepherd goes on to give three pieces of advice to bosses in a similar situation - listen to yourself, communicate more and ensure that the workforce supports each other
You can read that piece and subscribe to Moving Tribes here
Other stories that matter…
1. Shares in Deliveroo have risen more than 3 per cent after the online delivery company cut its pre-tax losses from £127 million to £57 million in the first half of 2023 and said it would return £250 million to shareholders, potentially through its first dividend payment. You can find the company’s results here. You can also check-out our podcast interview with Deliveroo co-founder and chief executive Will Shu here. This is the company’s share price graph since it floated in 2021…
2. Lotus is set to produce a record number of cars this year from its factory in Hethel, Norfolk. The sportscar company produced 2,200 vehicles in the first half of 2023 as its Chinese owner Geely pumps money into the new Emira sports car and the development of a new electric SUV called the Eletre. Guardian story here
3. A Cambridge-based company that has developed a robot that can pick raspberries is raising more than £2 million to expand. Fieldwork Robotics has raised £1.5 million from venture capital firm Elbow Beach Capital and is expected to raise another £600,000 from crowdfunding on Seedrs. You can find a Times story on Fieldwork here and more details on the company here
4. The New York Times has done a big feature on how vegetable producers in the UK are enjoying a rise in demand for frozen peas thanks to the cost-of-living squeeze. Piece here
5. The Guardian has a great first-person piece from the chairman of semi-professional football team Ashton United about what it is like running the club day-to-day. It sounds a lot like the struggles of building a small or medium-sized business. Jonathan Sayer, who is primarily an actor and writer, talks about his struggle identifying the best candidate for a job, placing an order for new kit twice, and facing a rebellion from supporters about removing John Smith’s from the bar. Piece here. Also on sport, The Wall Street Journal has a feature on how managers should deal with the complicated power dynamics caused by their employees earning more money than they do. Piece here
A correction from yesterday’s Off to Lunch: I referred to Adam Neumann as the co-founder of Softbank when he is of course the co-founder of WeWork, as was hopefully obvious from the rest of the piece. You can find yesterday’s Off to Lunch here
Podcast…
A reminder that the latest episode of Business Studies features an interview with Claire Hughes Johnson about the lessons she learned from working at Google and Stripe as they went from promising tech upstarts to big businesses. Johnson worked at Google for ten years - running Gmail, its self-driving car business and holding a collection of other roles - before becoming chief operating officer at Stripe. You can listen to the episode on Substack here, Apple here or Spotify here
And finally…
Today and tomorrow is your last chance to join the Off to Lunch mini-league for Fantasy Premier League this season. You can sign-up using this link. If you are looking for help with picking your team then check-out a guide to the 50 most interesting players in FPL this season by our sister publication Fantasy Gameweek. You can find that here
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Best
Graham