Retail ‘set for more administrations’

Demand for insolvency services will be high in the retail sector over the next few months, the British Retail Consortium (BRC) has predicted.

With mixed results emerging among various companies in the sector for the Christmas and new year period, the number of such enterprises entering administration might well continue rising.

This was certainly the case last year, the BRC noted, pointing to figures by Deloitte showing that while 165 retailers called in the administrators in 2010, this figure rose to 183 in 2011.

Furthermore, the number of administrations in the final quarter of last year was 25 per cent up on a year before.

BRC director general Stephen Robertson said: “2011 was a tough year with virtually no real terms growth for retailers. In such a competitive sector there will always be businesses that do well while others struggle but seeing such a high number of failures in the final quarter of the year is particularly alarming.”

And the first few months of 2012 are “bound to be quieter as consumers rein in spending after Christmas,” he reasoned.

Mr Robertson called for the government to provide more help, noting business rates, retail levies and the regulatory burden are areas where ministers can directly influence events.

Many small retailers, like their larger counterparts, may have found the going tough recently and those struggling to stay afloat may benefit from seeking insolvency and restructuring help as soon as possible.

One retailer that has necessarily entered administration is outdoor gear company Blacks, but its survival has been secured today (January 9th) after its assets were bought by JD Sports.

The £20 million sale brokered by administrators will see the assets of the firm go to JD Sports and the proceeds from the sale will be used to pay off Blacks’ debts with the Royal Bank of Scotland.

In the meantime, all Blacks shares will be de-listed.