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The Guardian - UK
The Guardian - UK
Sarah Butler

Wilko’s former chair tells MPs she was devastated by collapse of retailer

Former Wilko chair Lisa Wilkinson appearing before the business and trade select committee in the House of Commons
Former Wilko chair Lisa Wilkinson said, after prompting from MPs, she was ‘sorry’ the company was not supporting its staff any more. Photograph: House of Commons/UK Parliament/PA

The former boss of Wilko has tearfully told MPs she was devastated by the collapse of the budget retailer as she claimed the family’s multimillion-pound fortune was not enough to rescue it.

Lisa Wilkinson, the company’s former chair who is granddaughter of the founder and was an important shareholder, was hauled in front of the business and trade committee after Wilko collapsed in August with the loss of more than 12,000 jobs, £625m in debt and a £50m pension black hole.

The closure of its 400 stores has left large gaps on many high streets already affected by the demise of chains such as Debenhams, Topshop and Gap.

Wilkinson said £15m in dividends paid out to shareholders in the past nine years were in a holding company owned by family trusts and tied up in investments that were difficult to access. She claimed it would not have been possible to use that cash to help cut Wilko’s pension deficit because of a duty to shareholders.

Asked if the family had considered using that money to save the business she said: “That debate we had. We did not have sufficient funds to make a difference.”

She said that tens of millions of dividends paid before 2014 were largely used to buy out another section of the Wilkinson family through a series of deals, which also included a £63m special dividend.

Wilkinson said she regretted not taking faster action to bring in new management and tackle poor product ranges, and that Wilko had been hit by continuing to trade as an essential retailer throughout the Covid lockdowns while not taking furlough support.

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.

Wilkinson said life had got tougher after an attempt to secure a loan from Australia’s Macquarie Group was scotched by the economic chaos caused by the Liz Truss mini-budget in October 2022 which raised interest rates.

Speaking on Tuesday before the hearing, the HMV owner, Doug Putman, said his bid to rescue of Wilko from administration collapsed because “everyone just got a little bit greedy” and was not thinking about the jobs that could have been saved.

The Canadian retail billionaire, who engineered a turnaround of HMV in the UK and owns Toys R Us in Canada, was close to a deal but could not agree terms with Wilko’s IT suppliers.

However, Mark Jackson, the former Wilko former chief executive, told MPs that he did not believe Putman had been that close to a deal and was just one of 20 potential suitors for the company who had been unable to agree 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”.

The company spent £60m on a warehouse modernisation programme that went wrong, lost £40m on foreign exchange deals and failed to raise enough cash from investors and banks to enable a restructure to cut rents to go through.

“Despite those problems you can’t explain why dividends were paid … [nor why] money sloshing around in trusts can’t be used to refund a pension scheme,” Byrne said.

Wilkinson told MPs: “I am devastated … I don’t know how to put into words how sad I am that we have let down all our customers, team members, suppliers and advisers,.” After prompting from MPs that she had not used the word “sorry”, she added: “I am sorry that we are not there supporting all those people any more.”

The GMB union, which represents thousands of former Wilko workers, told the hearing Wilkinson “bears a significant amount of responsibility” for the chain’s collapse. Nadine Houghton, a national officer of the GMB, blamed “weak leadership and a failure to adapt to the changing market” for the loss of more than 12,000 jobs.

Atul Shah, a professor of accounting at City, University of London, said Wilko’s auditors had not been clear enough about the business’s dire situation in 2022 and “didn’t do their job”. He suggested that EY, the “big four” auditor, had waited to sign off the group’s accounts until after the sale of a warehouse gave it a cash injection, allowing the business to be declared a going concern.

However, Victoria Venning, from EY said auditors had clearly flagged there was a “material uncertainty” about Wilko’s future in late 2022. She said that to have refused to declare the business as a going concern would have been an “extreme view when there were realistic alternatives for the business,” including raising new funds and improving trade.

Kevin Hollinrake, the minister for enterprise, markets and small business, said investigations by the Insolvency Service and others were continuing into the action of Wilko’s directors before its collapse. He said the Pensions Regulator had so far found “no evidence of director misconduct”.

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