Wilko does not plan to close any stores in a soon-to-launch restructure aimed at cutting costs, the company has said.
The home and garden retailer is due to launch a company voluntary arrangement (CVA) next month in which it will seek rent cuts from landlords.
The business is reported to be at risk of running out of money and falling into administration if the CVA is not agreed.
Wilko recently secured a £40m two-year revolving credit facility with lender Hilco UK, needed to ensure the retailer would not run out of money if trading worsened this year. It also offloaded its distribution centre in Worksop, Nottinghamshire, for £48m in a sale and leaseback deal with DHL.
In January it launched a turnaround programme aimed at stripping costs from the business, including axing 150 assistant store manager roles while reducing the hours of team supervisors in 150 stores, equivalent to a further 150 full-time job losses. The cost-cutting comes alongside plans to grow sales through an omnichannel strategy.
There have also been a number of recent changes to its senior leadership team, including the appointment of new CEO Mark Jackson in December.
The retailer is seeking rent cuts on 250 of its 400 shops, according to The Sunday Times, with landlords facing the prospect of receiving no rent for three years.
It makes it likely some landlords will take their properties back to re-let them, despite a statement from Jackson that no closures are planned.
Under the terms of the CVA, rent will revert to the contractual amount after three years.
“We announced the start of our turnaround programme to drive Wilko forward in January, complete with a new streamlined senior team and a strategic plan to first stabilise the business and then implement a growth strategy,” said Jackson.
“We’re in the early stages of accelerating the turnaround plan and as is usual, the directors continue to explore all options for Wilko’s long-term future. Over the last four months, solid progress has been made across cost reduction and digital transformation, where in both areas, the business is ahead of its plan.
“We have no plans to close stores and are confident with the right actions, we’ll continue to be a key feature on the British high street and continue to expand our omnichannel offer, providing customers a place to shop all their household and garden needs.”
Wilko’s latest accounts, for the 12 months to 29 January 2022, recorded a £36.8m loss before tax, down from a profit of £4.4m the previous year. The trading update said that following the UK’s third lockdown at the start of the year, footfall in shopping centre and high street stores, representing the bulk of its estate, remained 30% down on pre-Covid levels.
As well as suffering from weak footfall, many of the legacy high street stores are seen as unsuited to larger products in Wilko’s general merchandise range, such as garden furniture, which calls for locations more easily accessible by car.
However, the retailer is currently focused on the immediate challenges of stabilising the business, including the cost-cutting programme, with more emphasis to be placed on estate rotation later.
It is also modernising its distribution processes, which have previously seen all stores receive the same stock irrespective of location.
Earlier this year, Wilko rolled out click & collect to all stores, offering online orders for collection within three hours.
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