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Retail administrations fall 15% in Q3

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The number of retailers falling into administration in the third quarter has fallen by 15 per cent compared to the same period last year, it has been announced.

In total, 28 retailers called in administrators compared with 33 this time in 2011 according to research by business advisory firm Deloitte.

Lee Manning, Restructuring Partner at Deloitte, explained the significance of the figures, commenting: “The decline in the number of retailers falling into administration is positive news.

“With some notable exceptions, the trend in recent months has been for fewer household names to suffer financial distress. As the year has gone on, low inflation has eased the pressure on consumers, particularly in the non-discretionary categories.

“Whilst this has yet to translate into stronger spending on discretionary items, there is cautious optimism for next year when wage growth is poised to outstrip inflation, providing a boost to spending power.”

However, last month saw sports retailer JJB Sports enter administration after failing to secure a buyer during its offer period, while department store Allders also ceased trading.

Last Saturday marked quarterly rent day for retailers across the UK and experts warned that a “perfect storm” following a disappointing Olympics and rising fuel prices may lead to further financial collapses within the sector.

Overall, Q3 saw a total of 395 companies enter administration compared with 524 over the same period in 2011, representing a 25 per cent decline.

Manning warned however that the industry faces tough months ahead, commenting: “Whilst the pressure is easing, the retail sector is still fragile.

“The real test will come in January once the busy Christmas trading period is over. Forecasts for the festive period are mixed.

“The challenge will be for retailers not to discount too quickly or too deeply to ensure they generate sales at acceptable margins in order to provide a stable platform for trading into the first quarter of 2013.”

Published on Monday 01 October by Editorial Assistant

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