Swathes of fashion retailers across the UK are showing signs of financial distress as they face “some of the most difficult trading conditions since the recession”.
According to new research from accountancy firm Moore Stephens, 6580 clothing stores are displaying telltale signs, representing a massive 19 per cent of the UK’s fashion retailers.
These “early warning signs” include large falls in revenue and poor payment history, forcing retailers to either lower profit margins or raise prices.
According to the report, dwindling consumer spending – which was revealed yesterday to be at its lowest point since 2013 – rising business rates, import costs and wage fees are piling the pressure on bricks-and-mortar retailers.
“Clothing retailers have faced some of the most difficult trading conditions since the recession in the past year,” Moore Stephens’ head of restructuring and insolvency Jeremy Willmont said.
“Fashion retailers have been hit by the perfect storm of rising costs, falling consumer spending and increased competition.
“All three have heaped pressure onto revenue and made profit margins difficult to maintain.
“The increasing popularity of online-only retailers, who have more manageable bills for business rates and lower payroll, means that many fashion retailers will need to improve their ‘bricks and clicks’ offering if they are to thrive.
“Businesses that are able to adapt to changing trends and preferences will put themselves in a much better position to not only avoid insolvency, but to flourish.”