The number of UK retailers experiencing “critical” financial problems are up by more than a quarter in the last three months.
According to restructuring specialist Begbies Traynor, there were 2,124 retail businesses in “critical financial distress” in the first 11 weeks of the October to December quarter.
This is a 25% jump from the 1696 in the period to July to September, but was down slightly on the 2,142 recorded in the last quarter of 2023, The Guardian reported.
Begbies attributed the sharp quarter-on-quarter increase to rising operational costs and subdued consumer confidence.
It comes as more than 28,000 UK retailers are facing “significant” financial distress at the end of 2024, with the general retail sector under the most pressure.
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Partner Julie Palmer said: “The weaker-than-expected retail sales performance in November, traditionally a critical month for the sector, further underscores the tough trading conditions, as consumers hold off on purchases amid low confidence and rising prices.
“Adding to this uncertainty, the measures announced in the Autumn Budget, including the planned increase to employers’ National Insurance Contributions, will significantly dial-up the challenges faced by these businesses.
“These changes, alongside increases to the Minimum Wage, will negatively impact cash flow and, consequently, we expect elevated insolvency levels across this sector during 2025.
“Even for more resilient businesses, the pressures remain relentless, and many will likely face financial challenges next year as they navigate these compounded difficulties.”
Homebase became the latest retail casualty last month, when it’s brand and up to 70 of its stores was snapped up by The Range owner CDS Superstores in a pre-pack deal.
CDS confirmed the first three of the DIY chain’s former stores will open next month (January 17) under its The Range banner and will house ‘Garden Centres by Homebase’.
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