By James Thompson
Wednesday, 7 January 2009
Nearly 2,000 retail shops are now in administration, hammering home the scale of the carnage sweeping across the retail sector.
Begbies Traynor, the insolvency and restructuring specialist, has revealed that 1,918 stores, including the Woolworths and MFI outlets, are now in the hands of administrators. As a result, about 40,000 retail jobs are now at risk, including 27,000 employees at Woolworths who are set to be made redundant.
The restructuring firm’s revelation follows the administration of Passion for Perfume, the fragrance shop, this week, which brings the total number of retailers that have collapsed to nine since 21 December 2008.
Whittard of Chelsea, the coffee and tea specialist, The Officers Club, the discount menswear chain, USC, the young fashion chain, and Adams, the childrenswear specialist, have also appointed administrators over recent weeks. Nick Hood, the executive chairman of Begbies Traynor, said that regretfully more high street chains are likely to close over the coming weeks.
Today, Marks & Spencer, the high street bellwether deepened the gloom on the high street by posting like-for-like sales decline of 7.1 per cent in the 13 weeks to 27 December. Yesterday, Next, the UK’s second-largest clothing retailer, delivered underlying sales down by 7 per cent for the period from 29 July to 24 December.
Begbies Traynor has also revealed that of the retailers that filed accounts at Companies House over the past 18 months pre-tax profits declined by an average of nearly three-quarters – illustrating that many retailers faced financial trouble before the consumer downturn gathered pace in the autumn of 2008.
Privately held retailers have to file their accounts at Companies House 10 months after the end of their trading period, which suggests that the sector’s problems date back to as early as late 2006 and long before the hefty discounting emerged at the end of last year.
Mr Hood said: “It would be extraordinary if falling profitability had not accelerated since the autumn of 2008. What this says is that clearly something was happening in the retail sector before it became headline news."
2,666 retailers filed accounts showing falling profits between July 2007 and December 2008, and Begbies Traynor found that the average fall in pre-tax profits was 73 per cent. It research also included some publicly listed companies, such as Debenhams.
A search on Companies House conducted by The Independent found that retailers, including QS, the discount fashion retailer owned by Grabal Alok, and Sofa Workshop, the furniture chain, posted pre-tax losses for trading periods that ended in 2008.