Skip to main content
BoF Logo

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.

More UK Retailers Fight To Survive After One of Worst Years

The number of companies selling both online and in stores in ‘significant financial distress’ has reached 40,000, up 24 percent since this time last year.
London's Oxford Street during lockdown.
London's Oxford Street during lockdown. Shutterstock.

The number of British retailers fighting for survival has jumped by about a quarter this year.

Almost 40,000 companies — selling both online and in stores — are currently in “significant financial distress,” according to a survey by insolvency firm Begbies Traynor Group Plc. The figure has risen 24 percent since this time last year as retailers grappled with the escalating impact of Covid-19. It has climbed 11 percent just since September.

“This has been one of the toughest years ever” for retailers, said Julie Palmer, partner at Begbies Traynor, in an emailed statement. “While many industries have been hit hard, retail — which was already suffering a crisis of confidence — has been shaken to its foundations.”

Shops in Britain had only recently reopened from lockdown when the government ordered non-essential stores in southeast England to shut again on Sunday in a bid to stem a more infectious mutation of Covid-19. Enforced closures in the run-up to Christmas — and less than two weeks before the end of the Brexit transition period — could prove fatal for some companies.

ADVERTISEMENT

This year has already seen the collapse of a number of chains, notably Debenhams, the department store operator, and Philip Green’s Arcadia Group Ltd. Between them, they employ more than 20,000 people. Both had been struggling for some time, weighed down with costly stores as they tried to compete with online upstarts. Covid-19 only accelerated their demise.

“Faced with the prospect of losing £2 billion ($2.7 billion) per week in sales for the third time this year, many businesses will be in serious difficulty and many thousands of jobs could be at risk,” said Helen Dickinson, chief executive of the British Retail Consortium, an industry trade body.

Even those who seemed to be faring better are taking the hit. On Monday, Mike Ashley’s Frasers Group Plc, which owns the Sports Direct brand and is in negotiations to save part of the Debenhams business, withdrew a profit forecast made only 10 days earlier. It said it could no longer commit to a prediction for profit to increase 20 percent to 30 percent this year, given a shutdown of many stores during “peak trading and the high likelihood of further rolling lockdowns nationwide over the following months.”

Shares of Frasers fell more than 10 percent on Monday, contributing to a broader sell-off among fashion retail stocks.

Retailers are calling for fresh financial support from the government to help them weather a crisis made worse by the current chaos at British ports — which followed the decision by a number of EU countries to temporarily close their borders with the UK.

Julian Dunkerton, chief executive officer of Superdry Plc, said the UK’s town centres face a “bleak” future without help. “The government needs to act urgently,” he said, calling for a reduction in the value-added tax shoppers pay on certain goods, among other measures.

By Deirdre Hipwell.

In This Article
Topics

© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions

More from Retail
Chronicle the ‘Retail Apocalypse’ and emerging retail models, including DTC brands.

What a Fashion Company Is Worth Today

In an era of austerity on Wall Street, apparel businesses are more likely to be valued on their profits rather than sales, which usually means lower payouts for founders and investors. That is, if they can find a buyer in the first place.


What’s the Plan at H&M?

The fast fashion giant occupies a shrinking middle ground between Shein and Zara. New CEO Daniel Ervér can lay out the path forward when the company reports quarterly results this week.


view more

Subscribe to the BoF Daily Digest

The essential daily round-up of fashion news, analysis, and breaking news alerts.

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.
CONNECT WITH US ON
BoF Professional - How to Turn Data Into Meaningful Customer Connections
© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions, Privacy Policy, Cookie Policy and Accessibility Statement.
BoF Professional - How to Turn Data Into Meaningful Customer Connections