UK value retailer Wilko Ltd is considering entering into a so-called company voluntary arrangement as the firm struggles to keep up with higher costs, according to people familiar with the matter.
(Bloomberg) — UK value retailer Wilko Ltd is considering entering into a so-called company voluntary arrangement as the firm struggles to keep up with higher costs, according to people familiar with the matter.
Wilko has approached financial advisers at PricewaterhouseCoopers in recent weeks, said the people, who asked not to be named discussing private information. The firm is looking at various restructuring options including a CVA, the people said.
A CVA is a form of UK insolvency proceeding that can permit retailers to renegotiate rents with creditors, like landlords, and close sites to lower costs.
“We’re in the early stages of the turnaround and, as is usual, the directors continue to explore all options for wilko’s long-term future,” Chief Executive Officer Mark Jackson said in an email statement responding to questions from Bloomberg, without adding details on potential CVA plans. A representative for PwC declined to comment.
The privately-owned retailer warned that it could run out of cash by the end of this year if trading worsens. Wilko, which started from a single hardware store in 1930, had previously secured a £40 million ($50 million) funding lifeline from Hilco UK, the owner of Homebase and Cath Kidston, Bloomberg reported earlier this year.
Wilko said major supply chain disruptions and a significant drop in footfall has stopped it “performing to its full potential.” The company had been trying to boost its online offering as part of turnaround efforts.
Read More: UK Retailer Wilko Secures £40 Million Loan from Hilco
Inflation is weighing on consumer confidence in the UK making it tough for many retailers. In recent months online furniture brand Made.com and fashion chains Joules and M&Co entered insolvency and retailers are warning that there is further inflation ahead.
–With assistance from Laura Benitez.
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