East Anglia: R3 warns of more retail failures
THE retail sector faces another wave of business failures following the latest “quarter day” on which rents to landlords traditionally fall due, an East Anglian insolvency specialist has warned.
According to figures from national insolvency body R3, the previous quarter day in June saw the highest number of retail administrations since the height of the recession and it says more are likely to follow the Michaelmas deadline which fell yesterday.
R3 eastern region chairman Shay Lettice said: “Quarterly rent payments fall in March, June, September and December each year and are a hefty outgoing for struggling firms.
“Three months ago Habitat, Homeform and Jane Norman all fell into administration, and the current situation is little improved with retail sales in August falling 0.1% from the month before.
“Currently, we have a significant number of retail businesses which have survived the recession, but which are now struggling to meet their rental obligations. Many have depleted their reserves to stay afloat and have no contingency plan for additional costs, unexpected outgoings or a fall in sales.”
Mr Lettice, a partner at accountancy firm Peters Elworthy & Moore, said that, with retailers facing the twin pressures of rising costs and pricing cutting to attract cash-strapped shoppers, more failures were likely.
He added: “I cannot urge retailers strongly enough to seek professional help at the first sign of financial trouble,” he said.
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“Many an insolvent company could be saved if the owners have the foresight to face up to their problems at the earliest stage.”