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Over 8,000 retailers on brink of implosion 12 April 2011

Analysis from insolvency practice RSM Tenon shows that 8,259 retail companies were deemed to be at high risk of insolvency in March, a four per cent rise on 7,911 retailers at risk in February.

Tenon’s report emerged the same day that a survey from the British Retail Consortium (BRC) revealed the high endured its worst fall in sales since records began in 1996, with a drop of 1.9 per cent in March compared to the same period last year.

The increase in the number of retailers that Tenon deemed at risk was the second in two months, reversing the positive trend that lasted nearly a year, and spelling more bad news for the sector.
Tenon’s Tracker Traffic Light report, collated by the firm’s recovery division, measures the number of businesses in danger of becoming insolvent.

With just one exception (a two per cent rise in April 2010), the number of retailers deemed to be at high risk of going under had either fallen or remained static since the beginning of last year.

But for each of the past two months, the number of companies in this category has risen by four per cent consecutively, indicating that retail insolvencies may be about to increase.

Carl Jackson, head of recovery for RSM Tenon, said: “We may technically be out of recession, but it is clear that the high street is struggling at the moment. Retailers are suffering as their costs soar with increased fuel and manufacturing costs and shoppers remain thrifty with their purchases.

“It appears people just aren’t spending unless they have to - and who can blame them as they struggle with the cost of increased tax burdens and rising inflation.”

He added: “Our recovery line has seen a large amount of enquiries regarding the retail sector, itself often an indicator for the wider economy. We believe this could spell gruelling times for business owners and it’s likely that we will see an increase in retailers facing insolvency.”

Tenon’s figures chime with statistics for the first quarter from Edward Symmons. The company said that while insolvencies in construction have now risen to 21 per cent of the first quarter case load in 2011, retail insolvencies, which made up some 12 per cent of cases during 2010, have also increased to almost 20 per cent.



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