Wilko swings to loss as trading gets tougher

by | Nov 29, 2022

UK retailer Wilko has swung to a pre-tax loss and is reportedly looking to shore up its funding, despite the chain’s owners taking £3m in dividends.

The homewares-to-cosmetics retailer, whose managing director Alison Hands is leaving in January 18 months after taking the job, is said to be trying to secure a £30m debt facility with alternative lenders.

One of the lenders Wilko is understood to have engaged with is Bantry Bay, a firm backed by the hedge fund Elliott Advisers which is reported to be in similar discussions with the fashion retailer Superdry, amid tough trading conditions, the Guardian newspaper reported.

The report added that owners, the Wilkinson family, received £2.25m in the year to January 31, and a further £750,000 in February despite a near 3% fall in sales to £1.3bn and a slide to a £36.8m pre-tax loss from a £2.5m profit a year before.

The company said it had reviewed sources of funding as trading conditions “remained challenging, with consumer confidence continuing to be fragile, [with] ongoing supply chain disruption and rising cost inflation”.

Wilko said it expected underlying sales to continue to fall throughout 2022 and it had begun to make cuts as it expected further pressure on costs from rising energy bills.

The company said there was no immediate issue with liquidity but its auditors said in their report the accounts indicated that the company was a going concern but had “insufficient committed financing” to withstand a “severe but plausible downturn in trading activity”.

Jerome Saint-Marc, the Wilko chief executive, said: “Our relationship with our lending partners is solid. The recent sale and leaseback of our distribution centre to DHL earlier this week unlocked £48m which has enabled us to repay our revolving credit facility in full.”

“We’re taking this opportunity, now that the deal is done, to review how we manage our ongoing financing to best trade through the current retail environment while continuing to invest in our future.”

He said the company was trying to drive growth by making its products available on the Amazon, eBay and OnBuy online marketplaces as well as enabling shoppers to pick up items ordered online in 69 stores.

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