Wilko reviewing management of financing ahead of vital Christmas season
Discounter Wilko has said it has a strong relationship with lenders, amid newspaper reports that it is urgently attempting to secure a £30m cash injection.
The high street chain was reported to be in emergency talks with alternative lenders over rescue cash, off the back of a dramatic leap in interest rates, according to The Sunday Times.
This could result in credit extended at higher rates of interest or in exchange for security over Wilko’s assets.
The Worksop head-quartered retailer, which employs 16,000 people, has been unable to agree to an extension of its revolving credit facility, the newspaper said.
Wilko had a “solid” relationship with lending partners, according to Wilko chief executive Jerome Saint-Marc.
The company last week announced a sale and leaseback of its Worksop distribution centre to DHL.
This agreement had unlocked £48m, which has enabled the brand to repay its revolving credit facility “in full,” Saint-Marc explained.
“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,” the retail boss added.
Earlier this autumn, Wilko shook up its rent payments schedule in a bid to conserve cash, telling landlords it would unilaterally pay its quarterly rent bill in monthly instalments.
While the firm reaped the rewards of being deemed an essential shop during the pandemic, with stores allowed to stay open throughout Covid, Wilko has come up against supply-chain woes and high freight costs.
It posted pre-tax profit of £4.4m for the year to January 2021, after raking in £1.36bn in sales.
The firm was founded by James Kemsey Wilkinson in 1930 and has gown from one site in Leicester to around 400 stores across the country today.
The company rebranded from Wilkinson to Wilko in 2014 as it ploughed ahead with a multichannel restructuring and introduced click-and-collect in stores.
High street budget brands are primed to entice new customers amid the cost of living crunch, with bosses at Wilko rival B&M expressing confidence in their business models in the economic downturn.
B&M said it would “expect to retain many of these consumers into any economic recovery,” echoing the optimism of discount grocers Aldi and Lidl, earlier this month.