UK retailers face year of distress

published 2 January 2013

UK retailers are facing another year of distress following a rise in the number of High Street chains going under, figures revealed Wednesday.

Last year 194 stores and chains fell into administration compared to 183 in 2011 and 165 in 2010, according to data from UK financial services firm Deloitte.

Deloitte warned retailers may struggle through 2013 as they try recover from the financial woes of the previous year.

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"These figures are a stark reminder of the difficulties which continue to face the High Street," said Lee Manning, restructuring services partner at Deloitte.

"Constrained household budgets and the structural challenges facing the sector mean it is certain that we will see further distress next year."

However UK retail giant John Lewis reported record Christmas sales Wednesday.

It posted a 14.8% rise in sales in the lead up to Christmas and the first days of its clearance. Sales were £684.8m for the five weeks to December 29th, including £31.7m for sales in stores on December 27th.

Britain's largest department store was bolstered by demand for technology and an increase in online offerings.

On the other hand, nationwide chains were among the casualties last year with Peacocks, La Senza, Blacks, Game, Clinton Cards, JJB Sports and Comet entering administration.

"Consumer confidence remains fragile and where we have seen some respite through lower inflation, this has not translated into increased spending with many consumers preferring to pay down existing debt or save," Manning said.

"Strong consumer spending growth is not likely to return any time soon which makes it essential that retailers address the fundamental issues affecting the industry - store portfolios and multichannel."

In total, 1,833 businesses went into administration in 2012, compared with 2,010 last year, a fall of 9%.