Member Article

Retail administrations dropping

Following the news this week that the UK economy has officially emerged from recession, the retail industry was given reason to be even more cheerful – administrations in the retail sector dropped to their lowest figure since 2007.

According to research by Deloitte, there were 290 retail administrations in 2009, a drop of 11% compared with the 327 seen in 2008, while still being up 4% on the 2007 low of 277.

Retail administrations steadily declined throughout 2009 – the first quarter of the year saw 124 administrations in the sector, falling to 63 in the second quarter and to 47 in the final quarter of last year.

Neil Matthews, Reorganisation Services director at Deloitte in Newcastle, said: “The steady decline in retail administration figures is encouraging, particularly now as we begin to emerge from the recession.

“There are a number of factors which have been at play here. Reported consumer spending has held up far better than expected. Equally, retailers have responded well to the recessionary environment, and have better managed their cash flows and stock levels. This has been reflected in less aggressive discounting strategies, which have in turn helped to maintain profitability.

“We are aware of several successful CVAs in the sector, as well as a number of informal agreements by retail landlords that have enabled the trading of more marginal high street retailers to continue. We continue to expect an increased use of retail CVAs as a successful alternative to administration.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .