ao link
0 £0.00
This item was added to your basket
Credit Strategy homepage
LinkedIn
Twitter
Intelligence, Insight and community for responsible professionals in credit

Retail insolvencies increase for second consecutive year

The number of retailers entering into administration in 2018 rose six percent to 125, up from 118 in 2017, according to big four accountancy firm Deloitte’s latest insolvency figures.

In addition, the number of retailers entering into company voluntary arrangements (CVAs) increased by 52 percent, from 25 in 2017 to 38 in 2018.

 

Deloitte’s figures show the number of large multi-site retailers – those with more than 10 stores – entering into a CVA last year increased significantly to 13, from just two in 2017. Large multi-site retail administration appointments also increased from 17 in the past year to 26 in 2018.

 

Dan Butters, partner and head of restructuring services at Deloitte, said: “Notwithstanding the increase in overall retail insolvencies, we have seen a significant increase in large retail insolvencies and CVAs in the last 12 months. 2018 saw some high-profile retail casualties and a continued deterioration in trading conditions for retailers in the final quarter of the year.

 

“Consumer confidence fell in the third quarter of 2018, which, combined with inflation-driven pressure on disposable incomes, has contributed to twelve consecutive months of declining footfall. The rapid decline in the performance of the high street has driven bricks and mortar retailers to increase their levels of discounting to counter this. This comes as retailers continued to face increasing staff and property costs, and a weaker sterling. Online retailers however have fared better, accounting for a record 21.5% of all UK retail sales in November.”

 

Across all industry sectors, including retail, the total number of administrations in England and Wales increased by 10 percent from 1,134 companies in 2017 to 1,251 in 2018.

 

The majority of sectors reported an increase in administrations between 2017 and 2018, with the only sectors reporting a reduction being printing and publishing (-21 percent) and recruitment and business services (-10 percent, albeit the third largest contributor with 198 appointments).

Over 2018, there was an 18 percent growth in CVAs across all industry sectors, including retail, rising from 334 to 395. CVAs in relation to bars, hotels and restaurants, for example, increased by four times last year to 36.

 

Butters added: “The squeeze in margins has left many retailers burdened with loss-making stores. This is a key driver for the rise in the number of major retail CVAs in 2018, with retailers seeking to close stores to reduce their cost base. We expect a particularly challenging first quarter in 2019 for many retailers as the full effect of Christmas trading becomes clear.”

Please login to continue reading this article.

Not a member?

Become a member

FREE registration. No credit card required

Register now
  • Stay up-to-date with industry news and appointments
  • Hear about events first
  • Read 1 free Premium article per month

Become a premium member

From as little as £3.48 per week

Become Premium
  • All the perks of a standard member plus:
  • Access to the entire Credit Strategy website
  • 12 months subscription to Credit Strategy Magazine
  • 25% discount to all conferences
  • Exclusive access to Premium Member only roundtables
  • 50% off award entry fees

GET THE LATEST INDUSTRY NEWS STRAIGHT TO YOUR INBOX

READ NEXT

Consumer car finance new business grows by 10% in March

Consumer car finance new business grows by 10% in March

“New nervousness” consumer attitude in credit market

“New nervousness” consumer attitude in credit market

For crown and country: How government debt collection reforms are becoming a reality

For crown and country: How government debt collection reforms are becoming a reality

Upcoming events

Credit Strategy
LinkedIn page

Member of

Did you find our website useful?

Thank you for your input

Thank you for your feedback

creditstrategy.co.uk – an online news and information service for the UK’s commercial and consumer credit industry. creditstrategy.co.uk is published by Shard Financial Media Limited, registered in England & Wales as 5481132, Axe & Bottle Court, 70 Newcomen St, London, SE1 1YT. All rights reserved. Credit Strategy is committed to diversity in the workplace. @ Copyright Shard Media Group