Retail administrations increase 15% in Q1 2012

Tuesday, 10 April 2012

The number of retailers falling into administration in the first quarter of this year increased by 15 per cent to 69 compared with 60 in the same period last year, according to research by Deloitte, the business advisory firm.

The research also stated that retail administrations in Q1 2012 increased by 64 per cent on the previous quarter, when 42 retailers entered administration, which included larger companies such as Peacocks, La Senza and Blacks.

Lee Manning, restructuring services partner at Deloitte, commented: “Whilst the quarterly rent day often sets the timing for the insolvency, a significant trigger in a number of recent administrations is that many retailers have too many marginal stores. As online retailing continues to grow whilst overall spending is weak, the fixed costs and poor performance of some stores drags on the overall business.

“The first quarter of 2012 is particularly significant given the high profile nature of the companies we have seen enter administration.  The number of job losses that came as a result of these administrations was almost 10,000 out of the 22,000 employed by those companies.  In contrast, Q1 2011 saw far lower levels of job losses. Overall, for 2011 and the first quarter of 2012 the largest 15 retail insolvencies had 2,800 stores and only 1,350 stores have survived; an attrition rate of 52%.”

Overall, the number of companies falling into administration, excluding retailers, in Q1 2012 saw a decline of 10 per cent, from 497 in Q1 2011 to 447. “Whilst conditions undoubtedly remain tough, the year-on-year decline is a positive indicator and gives a glimmer of hope that some industries are potentially over the worst,” added Manning.