Fears Wilko could close stores as firm in early stages of major shake-up - what is a CVA
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One of Britain's largest discount retailers could close high street branches in a ‘major shake-up.’ Wilko is reportedly considering closing sites in a bid to cut costs after launching a ‘turnaround programme’ to ‘stabilise the business’ earlier this year.
According to Bloomberg, the discount chain is looking at restructuring options and is said to be considering entering a company voluntary arrangement (CVA) which is a form of insolvency. A CVA is a way for a business to continue to keep trading while restructuring - but typically it closes some stores and negotiates rent costs down.
The shake-up comes after Wilko announced plans to close more than a dozen of its shops in January last year, and revealed it would be cutting 400 jobs this year. The retailer also announced it would be closing children’s toy departments earlier this year which shocked shoppers.
Mark Jackson, Wilko CEO said: “We announced the start of our turnaround programme to drive Wilko forward in January, complete with a new streamlined senior team and a strategic plan to first stabilise the business and then implement a growth strategy.
“We’re in the early stages of the turnaround and, as is usual, the directors continue to explore all options for wilko’s long-term future.
“We’re confident with the right actions, we’ll continue to be a key feature on the British high street and expand our omnichannel offer, providing customers a place to shop for all their household and garden needs.”
According to the government website, a CVA can be used if your limited company is insolvent to pay creditors over a fixed period. If creditors agree, your limited company can continue trading.
Other high street stores including Mother Care, Clintons and Caffe Nero have launched CVAs in recent years to save their business while closing some stores. At present, Wilko has around 400 stores across the UK and employs around 16,000 workers. It has not been confirmed which stores could be at risk of closure.