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

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 MPs on 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 be 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.

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.

Speaking on Tuesday before the hearing, the HMV owner, Doug Putman, said his planned rescue of Wilko 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 that 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” 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 company also spent £60m on a warehouse modernisation programme that went wrong. It lost £40m on foreign exchange deals, and failed to raise enough cash from investors and banks so that a restructure to cut rents failed to go through.

“Despite those problems you can’t explain why dividends were paid while money sloshing around in trusts can’t be used to refund a pension scheme,” Byrne said.

Wilkinson told MPs: “You today have given another opportunity to thank team members and customers will thank them to dying day. I appreciate each and every one of them. They were the bedrock of Wilko.

“I am devastated that we have let each and every one of those people down with the insolvency. 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,.”

She added, after prompting from MPs that she had not used the word “sorry”: “I am sorry that we are not there supporting all those people any more.”

The GMB union, which represents thousands of former Wilko workers, pointed the finger at Wilkinson, saying she “bears a significant amount of responsibility,” for its 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”.