Seven retailers collapsed on every single working day, on average, during the first quarter of the year, the accountant PricewaterhouseCoopers said yesterday, revealing figures that lay bare the impact of the worst recession for at least 35 years.
PWC said 705 retailers fell into insolvency between January and March, a 60 per cent increase on the same quarter last year.
"Survival of the fittest will be the mantra for 2009 – those with an inappropriate capital structure or a poor proposition will struggle to survive," said Andrew Garbutt, retail director at PwC. "In 2008 we saw relatively weak retailers going to the wall, but even good companies may disappear as they are exposed by low sales volumes and debt burdens."
While the first quarter is likely to mark the peak of retail insolvencies during the current recession, more are likely to follow over the coming months as weaker players battle bulging debts, falling profits, rising costs and the withdrawal of creditor insurance. The UK's gross domestic product tumbled by 1.9 per cent in the first quarter of the year – the worst quarterly performance since 1979.
The first-quarter insolvency figure is 24 per cent higher than during the final quarter of 2008, when 569 chains collapsed.
During the first quarter, notable names falling into administration included the fashion retailer Viyella, the Baugur-backed fashion group Mosaic, which operated Karen Millen, Coast and Oasis, and the maternity wear chain Blooming Marvellous, though each of them subsequently emerged from administration under different ownership structures.
On Friday, Alexon placed its beleaguered Bay Trading chain into administration, putting 1,000 jobs at risk. The fashion group has appointed Deloitte as administrator to its subsidiary Epcoscan, which trades as Bay Trading, after it succumbed to losses and its creditor insurer withdrew cover. Deloitte said it would continue to trade Bay Trading's 171 stores and 97 concessions as it seeks a buyer.Reuse content