Retail insolvency will worsen, says KPMG
The tentative future of the British High Street is likely to get worse as the year progresses. That's the warning from Mark Orton, head of restructuring at KPMG in the Midlands.
Several major brands have reported trading difficulties this week, including TJ Hughes and fashion retailer Jane Norman. Midlands chocolatier Thorntons also revealed plans to shut up to half of its UK outlets.
Orton said that the last set of figures published by the Insolvency Service – for the first quarter of 2011 – showed that retail administration appointments jumped by 55 per cent, with retail company voluntary arrangements (CVAs) increasing by 30 per cent.
He added: "With the cushioning effects of suppressed interest rates being overtaken by pressure on incomes from the rising cost of living and faltering customer confidence, persistently worsening consumer spend is starting to crystallise in business failure. Unfortunately the fundamental economic indicators suggest that retail insolvency figures will continue to worsen this year.
"For the retail industry it is now a question of survival of the fittest. Companies with healthy cashflow, low debt levels and sustained customer demand will survive; conversely retailers facing a cash squeeze, large debt burdens, faltering sales and - particularly those with expensive and large store portfolios - will face a very tough time indeed."
