The ex-CEO of Wilko expressed her sadness to members of Parliament as she shared that the downfall of the affordable retail chain was heartbreaking. She also stated that the family’s substantial wealth was unable to save the company.
Lisa Wilkinson, the granddaughter of the founder and a significant shareholder, served as the former chair of the company. She was summoned to appear before the business and trade committee by MPs, following the collapse of Wilko in August. This resulted in the loss of over 12,000 jobs, £625 million in debt, and a £50 million pension deficit.
The shutting down of 400 stores has resulted in significant vacancies on numerous busy shopping streets, which were already impacted by the downfall of other major retailers like Debenhams, Topshop, and Gap.
According to Wilkinson, £15 million has been distributed to shareholders in the last nine years through a holding company that is owned by family trusts and invested in assets that are not easily liquidated.
She stated that it would not be feasible to utilize the money to reduce Wilko’s pension deficit due to a responsibility to the shareholders.
When asked if the family had thought about utilizing the money to rescue the business, she responded, “We discussed that, but unfortunately, we didn’t have enough funds to make an impact.”
She stated that a large portion of the dividends paid before 2014, amounting to tens of millions, were primarily utilized to purchase another part of the Wilkinson family in a series of transactions. This also involved a special dividend of £63m.
Wilkinson expressed remorse for not promptly implementing changes in management and addressing subpar product offerings. She acknowledged that Wilko suffered from operating as an essential retailer during the Covid lockdowns.
She said Wilko had ultimately failed because it had run out of cash before it could implement a turnaround plan that involved cutting costs including rents and investing in its online business.
Before the hearing on Tuesday, Doug Putman, the owner of HMV, stated that his intended rescue of Wilko failed due to “greed” and a lack of consideration for the potential preservation of jobs.
The wealthy Canadian businessperson who successfully revived HMV in the UK and also holds ownership of Toys R Us in Canada was on the verge of reaching an agreement, but was unable to come to terms with Wilko’s IT suppliers.
Former Wilko CEO Mark Jackson informed members of Parliament that he did not think Putman had been very close to reaching a deal. Putman was one of 20 potential buyers for the company, but they were unable to come to an agreement on terms.
Liam Byrne MP, the chair of the business and trade committee, described its collapse as “a sorry story”. He said Wilkinson had admitted to “significant management mistakes” over the availability of stock as it lost the confidence of suppliers, poor product ranges and a decision to trade through the Covid lockdowns without accepting any furlough support for workers.
The organization also invested £60m in a project to update their warehouse, which ultimately did not go as planned. They incurred a loss of £40m from foreign currency transactions and were unable to secure sufficient funding from investors and banks. As a result, their attempt to restructure and reduce rent costs was unsuccessful.
Byrne stated that there is no explanation for why dividends were distributed when there is excess money in trusts that could be used to reimburse a pension plan.
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I am grateful for the chance to thank our team members and customers, who will be remembered by us forever. I value each and every one of them, as they were the foundation of our company, Wilko.
“I am heartbroken that we have failed to meet the expectations of all those individuals affected by our financial instability. I cannot adequately express the depth of my sadness for letting down our customers, team members, suppliers, and advisers.”
After being reminded by MPs, she clarified that she had not uttered the word “sorry”. She expressed regret that their support for those individuals had come to an end.
The GMB labor union, which speaks for numerous ex-employees of Wilko, accused Wilkinson of bearing a significant amount of responsibility for the company’s downfall.
According to Nadine Houghton, a national representative for the GMB, more than 12,000 jobs were lost due to inadequate leadership and a failure to adjust to the evolving market.
According to Atul Shah, a professor of accounting at City, University of London, the auditors of Wilko did not adequately communicate the dire state of the business in 2022 and failed to fulfill their responsibilities. He implied that EY, one of the “big four” auditors, delayed approving the company’s financial statements until after a warehouse was sold, providing a cash boost and allowing the business to be deemed financially stable.
Victoria Venning, an auditor at EY, stated that there was a significant doubt about Wilko’s future in late 2022. She also mentioned that it would have been unreasonable to not classify the business as a going concern, considering the viable options available such as obtaining additional funding and enhancing business operations.
The Insolvency Service and other organizations are currently conducting investigations into the actions of Wilko’s directors prior to its downfall, according to Kevin Hollinrake, the minister responsible for enterprise, markets, and small business. He also stated that the Pensions Regulator has not yet found any evidence of misconduct by the directors.
Source: theguardian.com
