Wilko profits dented by property costs

Value retailer Wilko has gone into the red after posting a pre-tax operating loss of £65m in the year to 3 February. It blamed the loss on exceptional store-related costs and currency forward contracts. Wilko said in its latest filing with Companies House that exceptional items, including £21.3m in property costs and a £39.9m hit from currency forward contracts, were among the major factors behind its performance during the 12-month period. However, like-for-like sales were up 3.7% on the previous year. EBITDA grew 2.7% to £50.2m, on the back of a 7.1% increase in turnover to £1.6bn. The retailer closed three stores during the year and plans to close another three in 2018-19. It has said it is now reassessing the carrying value of its freehold property and increasing its dilapidations provision, as well as focusing on a strategy to streamline underperforming stores. During the year Wilko opened 16 net new stores. It said it will open seven stores and relocate two in its current financial year. It currently has 419 stores in the UK. Property exceptional costs during the year included £8.1m for impairment of assets where the fair value of property held by the group was lower than the current carrying value. Its dilapidations provision, which grew by £13.2m during the year, was classes as exceptional as a result of the group’s “step change” in strategy to become more proactive in exiting underperforming stores. Combined with costs incurred from its store management restructuring, which amounted to £8.3m, exceptional charges in relation to its estate amounted to £36.5m. Operating profit dropped by £5m to £13m, owing to investment in its stores and IT infrastructure. Sean Toal, chief operating officer, said: “While we have taken some exceptionals during the year, the business is now set up to be in good shape as we undertake our new strategy for growth.” To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette