| Retail insolvency to worsen |
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Though the mooted imminent collapse of the British High Street may be over hyped, the current situation is likely to get worse as the year progresses according KPMG’s Mark Orton. Several large retailers have already disappeared, including Focus DIY and more recently, TJ Hughes and Jane Norman have gone into Administration placing hundreds of staff at risk. Midlands chocolatier Thorntons has also revealed plans to shut up to half of its UK outlets. Orton said that the last set of figures published by the Insolvency Service – for the first quarter of 2011 – showed that retail administration appointments jumped by 55 per cent, with retail company voluntary arrangements (CVAs) increasing by 30 per cent. He added: "With the cushioning effects of suppressed interest rates being overtaken by pressure on incomes from the rising cost of living and faltering customer confidence, persistently worsening consumer spend is starting to crystallise in business failure. Unfortunately the fundamental economic indicators suggest that retail insolvency figures will continue to worsen this year. "For the retail industry it is now a question of survival of the fittest. Companies with healthy cashflow, low debt levels and sustained customer demand will survive; conversely retailers facing a cash squeeze, large debt burdens, faltering sales and - particularly those with expensive and large store portfolios - will face a very tough time indeed." |
