Published on November 6th, 2018 | by The GC Team0
Corporate liquidations in retail rise 13% in Q3
Data from Dun & Bradstreet has found the number of corporate business insolvencies in Q3 dropped by 20% year on year, but the picture is a less positive one for retailers, whose corporate liquidations rose by 13%.
Of the near-400 insolvencies in retail in Q3 2018, two of the biggest department stores in the UK have reported severe financial distress. House of Fraser was bought by Sports Direct owner Mike Ashley in August and has since entered a company voluntary arrangement (CVA) with landlords. 31 stores out of 59 will be closed over the next year, risking the jobs of around 6,000 employees.
Debenhams, meanwhile, reported record losses in late October and announced that it will close up to 50 stores out of 169 in an effort to turn the business around.
Markus Kuger, Lead Economist at Dun & Bradstreet, said the retail sector should perform “slightly better” over the next quarter.
“This will be further buoyed by the fact that unemployment remains at its lowest levels since the 1970s, thereby helping to stimulate domestic demand,” Kuger commented.
“In addition, supportive measures by the government, announced in the budget, will help small retailers by cutting tax burden and apprenticeship levies. However, the long-term trend towards internet shopping will persist, thereby putting pressure on bricks & mortar retailers.”
Total figures for all corporate business sectors showed that 4,056 companies went bankrupt in Q3 2018 compared to 5,088 in Q3 2017, so a positive overall change during the past year.