Wilko made a £36.8m loss before tax in the 12 months to 29 January 2022, down from a profit of £4.4m the previous year.
Total sales fell by £43.2m to £1.32bn, while like-for-likes dipped by 3.1%, according to accounts newly filed at Companies House for Wilkinson Hardware Stores Ltd.
Following the UK’s third lockdown at the start of the year, footfall in the family-owned retailer’s shopping centre and high street stores, which represent the bulk of its estate, remained down 30% on pre-Covid levels. Retail park stores fared better but were still down more than 19% on footfall across the same period.
Wilko.com enjoyed “moderate growth” against a tough comparative period in 2020, when online sales boomed in lockdowns.
The performance decline also came amid “severe and widespread disruption to supply chains globally” from quarter two on, following the blocking of the Suez Canal by a container ship in March. The loss of sales was mitigated through cost controls and “flexing of operational overheads” in stores, according to the accounts.
The family-owned business closed one store, leaving an estate of 413 at the end of the period.
The accounts also reveal that of 15 stores earmarked for closure in January this year, two remain open following negotiations with landlords. The 15 were among 70 stores where profitability could be improved through better property deals or improved sales, the accounts said.
The going concern assessment in the accounts forecasts the business has sufficient funds to meet all liabilities until at least 28 January 2024 – the period covered by the assessment. The assessment assumes a “base case scenario” in which like for like sales volumes remain in decline throughout 2022 before stabilising in 2023, with ongoing inflation driving overall year on year sales growth. A “broad programme of cost reduction” has begun to reduce inflationary pressure on the operation.
The directors have also considered a “severe but plausible” alternative scenario of a “significant reduction of sales volumes from the base case, to levels significantly below those currently experienced”. While the directors consider this unlikely, the company is in talks to secure the financing needed to preserve its liquidity in the event of a such a scenario. The business is confident of its ability to do so, according to the accounts, but the financing was not in place when the statements were approved, on 22 November 2022.
It follows Wilko’s sale and lease back of its DC to DHL for £48m earlier this month, leaving the business in a cash position of £62.8m, according to the accounts. A £25m revolving credit facility was subsequently fully repaid and cancelled.
Wilko CEO Jerome Saint-Marc said: “Last financial year was tough for retail and that has continued into this year. We’ve remained focused on cost control and driving sales, as well as making some material changes to the way we operate in the face of difficult trading over the past two years.
“The recent sale and leaseback of our DC to DHL unlocked £48m which has enabled us to repay our revolving credit facility in full. Our relationship with our lending partners is solid. 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.”
Saint-Marc said Wilko products had been made available on three third-party marketplaces – Amazon, eBay and OnBuy – resulting in signficant online sales growth year on year.
“We’ve launched click & collect in 72 stores with 69 more stores coming online before Christmas this year and plans to roll out further,” he added.
“Our family owners remain committed to our strategy – clearly demonstrated by the re-investment of funds from the sale of our Nottinghamshire DC – enabling us to continue to commit to long-term strategies, whilst ensuring our short-term performance is optimised. We remain focused on helping hard-working families to be the best that they can be now and long into the future.”
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