Retail administrations hit two-year high

THE number of retail firms which fell into administration during the first quarter of 2010 increased by 30% to 60, compared with just 46 in the same period last year, according to accountancy firm Deloitte. This is the highest figure for more than two years.

The firm’s North West reorganisation services partner, Bill Dawson, said it was “no surprise” that the retail sector has experienced the most turmoil. Just this week, Crewe-based DIY retailer Focus announced thiat it had been forced to appoint administrators, putting a potential 4,000 jobs at risk.

“The increase in VAT and the Government’s austerity measures are undoubtedly hitting the sector hard.  In particular, smaller retailers are likely to be feeling the pinch more so than ever, as they often have few grounds to negotiate flexible credit terms with suppliers and may find it difficult to raise funding.

“During the economic downturn, companies experiencing financial difficulty were able to rely on low interest rates and HMRC’s favourable Time to Pay scheme in order to make ends meet.  However, as HMRC needs to recoup lost revenue, we could see a more hardened approach being taken.”

The overall number of administrations during the first quarter increased by 21% to 557.

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