(qlmbusinessnews.com Tues, 5th Sept, 2023) London, UK —
Discount retailer B&M has reached an agreement to purchase numerous stores from the recently collapsed retailer Wilko, while larger rescue deal discussions remain uncertain.
B&M has confirmed it will acquire as many as 51 out of Wilko's 400 stores in a deal valued at £13 million.
Wilko entered administration in August, struggling with significant losses and a financial shortfall.
Reportedly, a proposal made by HMV's owner has hit a snag due to supplier and funding issues.
Established in 1930, Wilko experienced rapid growth during the 1990s and became one of the UK's fastest-growing retailers.
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However, stiff competition from rivals such as B&M, Poundland, and Home Bargains, coupled with the high cost of living, has driven customers to seek bargains elsewhere.
Wilko's stores remain operational as it searches for a buyer for a larger portion of its estate, but the collapse has put over 12,500 jobs at risk.
The first round of redundancies, involving 269 jobs at Wilko's Worksop support center and 14 at a subsidiary firm, commenced on Monday.
B&M has not disclosed which Wilko stores it has acquired or the number of jobs that might be preserved through the deal.
The funds generated from the sale will aid in reimbursing Wilko's creditors while administrators from PwC oversee the business's operations, including employee salaries.
Retail expert Catherine Shuttleworth noted that the acquisition could help B&M attract more customers. The chain has accelerated its expansion plans since the pandemic, opening 21 new stores in the previous fiscal year.
“This may also create local jobs for Wilko colleagues in the newly-owned stores,” Ms. Shuttleworth commented.
Several retailers and investors have been in discussions with PwC regarding the potential acquisition of Wilko stores or its online brand.
Canadian billionaire Doug Putman, who purchased the collapsed music chain HMV in 2019, is reportedly inching closer to buying up to 300 stores. Following a significant turnaround, plans are in place to reopen HMV's flagship Oxford Street store later this year.
Although Mr. Putman's bid for Wilko is still active, finalizing funding for the deal has proven challenging.
A source familiar with the situation stated that the deal was complex, involving negotiations with crucial suppliers to stock the shelves. Every effort is being made to give Mr. Putman's bid the “best chance,” and discussions could continue for several more weeks.
Should Mr. Putman's bid falter, Wilko is likely to go into liquidation, with rival retailers acquiring portions of its stores.
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Bill Grimsey, former CEO of Wickes and Iceland, drew parallels between Wilko's recent performance and that of Woolworths before it went bankrupt in 2008. He cited a loss of identity, an excess of stores in unfavorable locations, and lagging behind competitors as contributing factors.
Many Wilko stores are situated in high street locations in traditional town centers. While these locations are convenient for shoppers without cars, there has been a shift toward larger retail parks and out-of-town options since the pandemic, benefiting Wilko's rivals such as B&M and Poundland.
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