More Retail Casualties Expected in 2013

Nearly 140 UK retail firms are in ‘critical condition’, despite Christmas trade providing a temporary lift to sales, according to the
‘UK business solvency survey’
issued by business recovery specialist Begbies Traynor.

The firm said that the number of UK companies in financial distress increased by 35% to 13,700 during Q412. The number includes many retailers, who could struggle to meet their latest quarterly rent payment due this month, and the survey predicts an increase in the number of national and regional retail insolvencies in 2013.

It suggests that the retail sectors most likely to see casualties include those selling books, news and stationery, where the number of companies reporting problems is 85% up on the previous quarter.

“With quarterly rent day landing on 25 December, combined with fierce competition and significant margin pressure throughout the January sales period as consumer tighten their belts after Christmas, we could well see a surge of new insolvency activity during the first quarter of 2013,” said Julie Palmer, partner at Begbies Traynor.

“Though the performance of national retailers is well documented, it represents just the tip of the iceberg with thousands of smaller and specialist retailers struggling to stay afloat in today’s austerity Britain.”

A number of well-known UK retail names have been unable to survive the squeeze on consumers’ incomes of the past four years. Casualties have ranged from Woolworths in late 2008 to, more recently, JJB Sports and electricals chain Comet.

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