6th Sep 11
High street braced for further closures after disappointing summer
by Natasha Redman
Streets behind: many towns seeing increasing shop closures on their high streets
Streets behind: many towns seeing increasing shop closures on their high streets
The UK’s high street retailers are set for a further wave of closures after one of the most disappointing summer trading periods in a number of years and increasing concern over pressures on consumers as Christmas approaches.
Sales figures for August, hit by the riots, poor weather and volatile stockmarkets, fell 2.2 per cent among mid-market retailers, revealed accountancy firm BDO – the biggest drops since the peak of the recession two years ago. Widespread chaos, which resulted in shops being forced to close during operating hours well beyond the main riot areas, has left many retailers with an uphill battle as the quarterly rent deadline approaches at the end of September.
Among those already facing severe financial woes is Clinton Cards. Recent reports revealed that the company had requested more time from its landlords to meet rent bills, the same as it did at this time in 2010. Earlier this year, rent deadlines for the end of March and June were subsequently followed by a number of retailers going into administration. They included Habitat, Jane Norman, Focus DIY and TJ Hughes.
During the second quarter of the year, some 375 retailers called in the administrators, revealed accountancy firm PricewaterhouseCoopers, a rise of nine per cent on the same period last year.
Meanwhile, many of the surviving mid-sized retailers which are listed on the stock exchange are being increasingly targeted by short sellers – investors who bet on share value falling. Recent figures from Data Explorers indicate that stocks heavily shorted included Dixons, Ocado, Mothercare, Carpetright, Next, HMV and Home Retail.
Accountancy company RSM Tenon has identified nearly 9,000 retailers which it believes are currently financially vulnerable, a rise of more than 10 per cent during the past six months.
The British Property Federation and the Local Data Company will issue a report this week which is expected to reveal that many towns have suffered a sharp increase in the amount of shops that are boarded up. Previous British Retail Consortium figures indicate that roughly one in 10 shops now stand empty in shopping districts of town centres.
The BRC is due to publish its August sales survey today, which is expected to confirm the bleak picture painted by BDO. July’s figures suggested that comparable sales had increased by 0.6 per cent – a number helped by inflation.
The coming two weeks are due to see trading updates from JD Weatherspoon, Next, Home Retail Group, Costa Coffee parent Whitbread, Primark parent Associated British Foods, Carpetright and B&Q parent Kingfisher. All will be watched closely for indications of troubles on the high street.
But on the plus side, struggling retailers could be able to ease the pressure from the creditors as the fast-approaching Christmas period is traditionally the busiest trading time of the year.
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