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| | | | 06/01/2015 | City AM, Catherine Neilan - First quarter the worst time of year for retail administrations | | | | | Q1 consistently the biggest period for retail failures | | | | | CityAM reports that looking back over the past three years, the first quarter has been consistently the biggest period for retail failures. Experts believe 2015 could see even more companies collapse as the repercussions of Black Friday are finally felt.
Research conducted for CityAM shows that 30% of all redundancies and 37% of all store closures were made in the first three months of 2014.
That number was even higher in 2013, when 63% of jobs were lost between January and March, with 56% of store closures taking place in that time.
Back in 2012, 55% of redundancies and 48% of store closures occurred in the first quarter.
Nick Hood, business risk adviser at Opus Restructuring, said: "The trend is clear - there is a definite bunching of distress in the quarter after Christmas and New Year".
There are several reasons for this: retailers who may have been struggling prior to the festive period will most likely have been given a period of grace to turn performance around. Banks and suppliers will be watching like hawks, poised to pul the plug if and when they sense that hasn't happened.
The quarterly rent date occurs on December 25, and VAT is due on January 31, meaning it is a particularly punishing time for cash flows.
More recently, the high level of discounting has also been an issue as it eats into margins. Hood believes Black Friday will make the first quarter of 2015 a particularly challenging time for those companies who were already feeling the pinch.
The research was carried out by Opus, using data from the Centre for Retail Research and Insolvency Service. |
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