Begbies Traynor: Thousands of retailers in “critical” financial distress

22nd December 2023 | Jack Oliver

Nearly 4,500 retailers are in “critical financial distress” in the run up to Christmas, according to insolvency firm Begbies Traynor.

The firm said a combination of lacklustre Christmas sales, persistent inflation, and high interest rates were to blame.

The data – which covered the first 10 weeks of the fourth quarter – found that ‘critical’ financial distress had risen considerably across the whole retail sector compared to the previous quarter, up by around 10% for food and drug retailers and increasing by around 13.7% for general retailers.

Almost 46,000 retailers are in ‘significant’ financial distress, said Begbies Traynor, 7.5% higher than in the third quarter and 4.6% higher than in the same period last year.

Interestingly, the firm found that over 20% of all retailers in ‘critical’ financial distress are online-only.

Julie Palmer, partner at Begbies Traynor, said: “There is no doubt about it, the last 12 months have been incredibly difficult for British retailers as an increasingly tough economic backdrop continued to pile on the pressure, with businesses that were only just standing on two feet again now feeling the pain this Christmas.

“And, after a year where consumers faced one of the worst cost-of-living squeezes on their wallets, the shopping bonanza many retailers were relying on this Christmas does not seem to have materialised, pushing many businesses close to financial ruin this winter.”

“Sadly, after the year they have just been through, many business owners will be looking ahead to 2024 with a degree of hope, but there’s nothing to suggest it’s going to be any easier next year.”

She added: “After years of being addicted to cheap money, many of these businesses must now grapple with increased costs and another minimum wage hike in April, while converting their stock into cash to avoid quarterly rent day turning in to a fatal New Year hangover.”


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