Welcome relief for North West retailers as ‘risk scores’ fall
Pressure on North West retailers has eased over the past quarter, according to new research by the insolvency and restructuring trade body R3 which offers a glimmer of hope for the region’s high streets.
The sector has faced significant problems and retail insolvencies so far this year include Debenhams, Jack Wills, Select, Liam Gallagher’s Pretty Green, and Karen Millen and its subsidiary Coast, which were acquired by Manchester-based Boohoo.
However, latest figures show that the number of store-based retailers considered at higher than normal risk of insolvency fell by one percentage point to 39.3% between June and September.
Amongst specialist retailers, clothing stores showed one of the biggest improvements in their position, with the number at elevated risk of insolvency down from 36.2% in June to 34.8% in September.
Risk scores have also fallen or remained flat for other specialist retailers, with 37.7% of motor retailers now considered at elevated risk (down from 38.8% in June), along with 41.3% of home furnishings stores (42% in June) and 37.6% of footwear retailers (38% in June).
For retailers selling online or via catalogues, the number at higher than normal risk – 34.1% – has also fallen slightly over the previous three months (34.6% in June).
Paul Barber, North West chair of R3 and a partner at Begbies Traynor, said: “After the turmoil on the high street in recent years these figures indicate that the pressure on retailers has eased slightly.
“In particular, it is good to see that the fashion sector is now on a more secure footing, given the turbulence in that sector this year.
“While some stores will have benefited from the uplift in sales over the Summer months, traditional retailers are also fighting back.
“The high street is far from dead. Indeed, e-commerce firms face challenges of their own and their risk scores are almost as high as those for physical stores.”
He added: “However, while recent months may have provided some welcome relief for retailers, conditions remain tough and, in the current climate of uncertainty, all businesses need to keep a close eye on profitability and seek expert help early on if problems arise.”
The figures are from R3’s latest retail insolvency risk tracker, which is compiled using Bureau van Dijk’s ‘Fame’ database and measures companies’ balances sheets, director track records and other information to work out their likelihood of survival over the next 12 months.
