UK footwear retailers in trouble
22/03/2012
With many chains facing large property rental bills as the first quarter of the year came to an end, Nick Hood, head of external affairs for an organisation called Company Watch, described the UK retail sector as "embattled". He said: "The sector is emerging from a traumatic Christmas and New Year peak trading season, when many familiar names reported falling revenues despite heavy discounting. This desperate dash to preserve market share has bitten deeply into profitability and in most cases will have done nothing to improve the financial position of these retailers."
He said the casualty rate among retailers has been "alarmingly high" in recent months, with 11 national chains going into some form of insolvency since the beginning of December 2011, threatening over 1,500 stores and affecting almost 23,000 retail jobs.
Two of the 11 retail chains are footwear firms. Barratts Priceless, which has 191 stores across the UK, went into administration in December, meaning that it suffered an insolvency event but is continuing to trade under supervision from external administrators. If this leads to liquidation, 3,840 jobs are at risk. The much smaller Shoon chain, a specialist in comfort footwear, went into administration in February. It had 280 employees at the time. The administrators quickly closed several of the company's 23 stores, but have said recently that they have received a number of firm offers to take the business over.
In addition to having rent to pay, traditionally on March 25, Mr Hood said many UK retailers also faced a tax bill at the end of April, putting further strain on cashflow. He concluded: “It is inevitable that there will be further retail casualties. The majority of failures will be smaller chains and single site family-owned businesses, but other larger household name retailers may well be missing from our high streets before the year is out."
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