Retail administrations fall to lowest in four years

RETAIL administrations are down 65% year on year according to research by business advisory firm Deloitte.

The number of retail companies falling into administration in the first quarter of this year fell to 44 compared with 124 in quarter one of 2009.

This is the lowest number of retailers to enter administration in a quarter in four years. Quarter on quarter, administrations were down 6%.

Dan Butters, partner in the reorganisation services practice in the Leeds office of Deloitte, said: “The first quarter of 2009 saw exceptionally high levels of retail administrations and so it is not surprising to see a drop this time round. However, this period can be make-or-break time for struggling retailers so the scale of the decrease suggests that many retailers have been successful in taking the measures necessary to equip their business for tougher trading conditions.

“Indeed, we have seen an increasing acceptance of the use of CVAs and proactive steps to better manage cash flows. However, whilst these figures appear to suggest an improvement in fortunes for the retail industry, the outlook is far from plain sailing.”

He added: “The UK consumer faces a number of reductions in their disposable income over the next 12-18 months and it is hard to imagine that measures to tackle the national debt will not impact them further. Retail sales are likely to remain broadly flat this year and probably next, whilst costs continue to increase. Growth will be hard to come by and further retail failures seem inevitable.”