A MAJOR discount chain will NOT be making a bid to buy failed high street shop Wilko after it collapsed into administration yesterday.
Rivals of the bargain brand are interested in rescuing the business, which could save hundreds of shop from closing and thousands of jobs from being lost.
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But The Sun can reveal that Poundstretcher is not one of the names considering stepping in.
The discount chain currently operates 308 stores across UK high streets and in big retail parks and only recently emerged from a CVA (compulsory voluntary arrangement), which is a form of insolvency.
Sources at Poundstretcher told The Sun it has “no interest” in rescuing Wilko from administration.
The insider said that Wilko’s business model is “unprofitable” and for that reason “has no interest whatsoever”.
It would be “irresponsible” to take on new risk now that Poundstretcher has bounced back into profit, they added.
The bargain chain emerged from a two-year CVA in November 2022.
A CVA is a way for a business to restructure and continue trading, but typically it closes some stores and negotiates rent costs down.
The chain brought in the legal arrangement back in July 2020 when it had close to 500 branches, to find a way of offloading high-rent stores.
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The bargain brand is now in the middle of expanding its presence on the high street and plans to open 50 new stores by the of the year.
But it’s understood that it has no interest in moving into Wilko stores if they were to close.
Other Wilko rivals could snap up between 200 and 300 of the retailer’s shops – but no deal is on the table yet.
Hilco Capital which invested £40million pounds in the business in January won’t be bidding, the FT reports.
The restructuring and refinancing firm previously rescued Clintons and Homebase out of administration.
It also oversaw the liquidation process of both British Home Stores and Woolworths.
Discount supermarkets Aldi and Lidl are looking to open new locations around the country as they both expand.
But one expert believes this wouldn’t result in an offer for Wilko.
Dr Amna Khan, a senior lecturer in consumer behaviour and retailing at Manchester Metropolitan University said: “Wilkos, locations are often in areas that have higher costs to run than discount retailers would be interested in.
“I don’t think any of the discount supermarkets would consider an offer either.”
A deal to save stores could be difficult to reach, retail experts say.
Rival discounters like B&M and Home Bargains have succeeded in out of town locations.
Most of Wilko’s stores are located on the high street, where shoppers tend to buy less and rents are higher, making them less appealing to any potential buyer.
Retail analyst Richard Hyman told The Sun: “I’m not sure any of the string discounters would want the stores – they have generally avoided high streets to focus on retail parks, which are better locations for this kind of retailing.
“However, Wilko’s stock will be a major attraction. At retail prices, there will be between five and £600 million of stock and the opportunity to acquire it at a knock down price will attract some opportunists.”
A buyer could save stores and the brand, or could just purchase the brick and mortar sites to use as their own.
Or a deal could include no stores at all, instead buying up the stock or brand name.
Wilko appointed administrators yesterday, with all control of the business being passed over to PricewaterhouseCoopers (PwC).
Across social media shoppers have been sharing their emotional tributes to the discounter, with many comparing it to the loss of Woolworths.
Chief Executive Officer, Mark Jackson, said yesterday that the company had “left no stone unturned” in a bid to save the chain.
In an emotional open letter to all staff and heartbroken shoppers, Mr Jackson thanked them for their support.
This post first appeared on thesun.co.uk
