Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

Retail insolvencies surge

by
30th Jul 2012
Save content
Have you found this content useful? Use the button above to save it to your profile.

The number of retailers going out of business in the second quarter jumped up by more than 10%, according to recent figures from PwC.

Retail analysts said the bad weather and dampened consumer confidence were contributing factors to the rise in bankruptcies, with Clinton Cards and Game among victims of the high street cull.

However, the corporate insolvency statistics show an overall reduction (3,927 companies) between April and June - down 3% on the same quarter (4,055 companies) in 2011.

This overall reduction in insolvencies is expected to fuel hopes that the ‘Olympic effect’ would reverse the economic rot in the third quarter, after the ONS delivered a shock announcement last week that GDP declined by 0.7% between April and June.

In spite of this the PwC analysis reveals the retail industry is significantly worse off than this time last year, with a 10.3% increase in insolvencies compared to the same quarter of last year. There were 426 insolvencies in the retail sector in the second quarter, compared to 386 the previous year.

Mike Jervis, PwC business recovery partner and retail specialist, said: "Retail is the sector which keeps bucking this trend. In fact, quarter-on-quarter retail insolvencies have increased for every one of the last four quarters.

“The high street environment continues to be challenging and quarter two has seen Clintons, Game and Julian Graves go into administration.”

Other sectors, such as construction, hospitality and leisure, have had fewer insolvencies during the second quarter, with PwC adding there was a "clear reduction" compared with previous recessions.

However, the worst affected sectors continue to be construction (644 companies), manufacturing (427), retail (426), hospitality and leisure (332), and real estate (169).

The analysis shows that London has the highest number of insolvencies with 887, however this represents a 9% fall compared to the same quarter in 2011 (980 companies).

By region the biggest increase in insolvencies was in the North East and Cumbria, which saw a 70% increase, while the biggest reduction was in the West where the number dropped by 32%.

Since 2010 there have been more than 9,000 insolvencies in construction and manufacturing. However there has been a recent reduction in the rate of bankruptcies in those sectors - across the country 15.5% fewer construction firms had gone bust than in the previous quarter, and 8.4% fewer manufacturers.

Where most regions enjoyed a relatively good quarter, London lost 66 manufacturing firms – the biggest rise in any UK region at 50%.

Replies (1)

Please login or register to join the discussion.

By Robert Lovell
31st Jul 2012 10:20

CBI retail figures add to economic gloom

The CBI's monthly distributive trades survey also found retail sales to have risen at a much weaker rate than retailers had hoped in July.

The survey's net balance - the number of retailers seeing a higher volume of sales compared to a year ago minus those seeing a decline - fell from a one-and-a-half year high of +42% in June to +11%, its lowest since April.

Visit the Economy discussion group for more data and analysis.

Thanks (1)