Retailers feel a chill as 27,000 in financial distress

• 97 “General Retailers” in critical financial distress – often a precursor to formal insolvency
• More than 9,000 online retailers slip into significant financial distress with a 7 per cent YoY rise
  to Q4 2019 

In the final days before Christmas, the number of retailers facing significant financial distress has
increased to nearly 27,000 (26,930) during Q4 2019 (October 1 – December 19) with distress amongst online retailers increasing to more than 9,000 according to new data from Begbies Traynor.

The UK’s leading independent insolvency firm has discovered that the number of online retail
companies in significant financial distress has increased by 65 per cent over the past three years
(5,488: Q3 2016) (9,024: Q3 2019).

In addition to this, significant distress amongst fashion retailers has risen 21% over the past three
years, with 3,355 companies (Q3 2019) now affected, however, there has been little change in
distress levels in this retail sub sector over the past 12 months.

The same trend of lower distress levels has also been seen for high street retailers. Despite 17,893
high street retailers being in distress, this number has plateaued since last Christmas.

Julie Palmer, partner at Begbies Traynor, summarises 2019 – and looks forward to 2020 – for UK
retailers.

“The year started with uncertainty for businesses with a decision on a Brexit deal and the nature of
the UK’s exit from the EU set to be determined.

“Consumer confidence has suffered and as a consequence it hasn’t just been retail businesses that
have suffered. Yes, we have seen the collapse of the likes of Mothercare and Karen Millen, while
Arcadia has forced through a CVA, but the downfall of Thomas Cook has truly shaken the high street.

“However, with the general election over and MP’s having passed the Government’s Brexit bill,
businesses now have a degree of certainty enabling them to better plan for the future outside of the
EU.

“Looking to 2020, it seems as if the accelerating numbers of online retailers in distress will continue.
The competition online is ferocious, but the rewards for those that succeed – such as BooHoo – are huge. In the New Year, strong leadership will be key. There are some tough decisions to be made
and some hefty modernisations to bring forward. Even retailers that are performing well will have to
keep on their toes. As Ted Baker will attest, 12 months is an awfully long time in retail. In the coming
months, many businesses will have to make a decision on whether to stick or twist with investment,
innovation and expansion.”