More retail casualties as Christmas trading unwinds, says Begbies Traynor

High Street

The business recovery group is anticipating more retail casualties as Christmas trading unwinds. It estimates that almost 140, mainly small retailers, are in a financially critical situation at a time when they should have been at their trading peak, reports The Telegraph.

But research shows another 13,700 were registering significant financial distress between October 1 and December 17, an increase of 35pc. There was a marked 85pc jump in the total of books, news and stationery businesses in trouble while the number of pharmaceutical and personal care companies struggling was up by 80pc and the proportion of drinks firms signalling a downturn was 38pc higher.

Comet has been the biggest retail casualty so far but Julie Palmer, Begbies Traynor partner says that with thousands of smaller and specialist retailers struggling to stay afloat in ‘Austerity Britain’ the performance of national retailers is “just the tip of the iceberg.”

Booksellers are suffering from the growing practice of ‘showrooming’ where shoppers look at window prices or try out products before trying to buy them cheaper on line. Independent chemists and alcohol retailers say they are facing an unequal battle with supermarket prices, low margin promotions and the “convenience factor for consumers of one stop shopping.”

Ms Palmer said: “Whilst many of these zombie retailers may survive thanks to last minute spending before Christmas and with quarterly rent day landing on December 25 combined with fierce competition and significant market pressure throughout the January sales period as consumers tighten their belts after Christmas we could well see a surge of new insolvency activity during the first quarter of 2013.”

Retailers in home decor and household goods have been bucking the trend because homeowners unable to find a mortgage to help them move up the property ladder have been renovating and redecorating their existing homes.

The Begbies Trayner definition of a business with critical problems is companies with county court judgments of over £5,000 against them in a three month period, winding up petitions against them or those entering corporate voluntary arrangements.