Retail distress for cars, clothes and food – KPMG

A study by the accountancy firm KPMG has confirmed that retailers across the board are coming under financial pressure.

The firm’s latest ‘retail distress tracker’, which looks at companies facing issues such as profit warnings, refinancing and the potential breach of banking covenants, has found that businesses selling cars and car parts represent a quarter of the firms in distress.

But retailers handling home improvement goods – which includes DIY and furniture – and those selling clothes are also under pressure, with each sector representing 20% of the findings.

Food, drink and general retailers made up 16%, while retailers of leisure goods added another 16%.

Christine Hewson, head of retail for KPMG in the north, said: “It’s no surprise that our data echoes the headlines of recent weeks – the region’s automotive sector retailers really are on a sticky wicket at the moment. With unemployment rising sharply, consumers are reducing their outgoings drastically, with non-essentials being struck off the shopping list altogether.”

“Retailers selling products for the home are also having a great deal of difficulty selling to plan in the current economic environment. While the UK was gripped by home improvement fever only a year ago, consumers are now turning their backs on furniture and other large ticket items for the home.”

KPMG said its tracker collates financial data from a broad range of market sources on private and public companies. It did not say how many companies were analysed.