Q2 sees UK administrations fall in retail sector
Quarter two insolvency figures released by The Insolvency Service show administration figures for UK retail have dropped from the first quarter of 2012.
The retail trade sector alone (not seasonally adjusted) showed an eight per cent reduction in the number of administrations compared to the figures recorded for Q1 2012, with 52 businesses entering into administration, compared with 57 in Q1 2012.
From the recent June sale figures released by The Office of National Statistics, clothing and footwear could be considered to be the drivers behind the sector’s better performance.
Q2 has proved to be a more buoyant quarter for retail than Q1 due to consumers taking advantage of the extra holiday provided by the Jubilee and early sales and promotions. Additionally the drop in inflation has eased the pain suffered in Q1.
Despite 2012 witnessing a number of high profile collapses, a number of these brands are fighting for survival through a formal process. One example is Clinton Cards, which was bought out of administration by American Greetings Corporation, saving 397 shops and numerous jobs in the UK.
Philip Duffy (pictured), partner at financial advisory and investment banking firm Duff & Phelps, says: “Although the recent sales figures for June were not as high as hoped, compared to the same period last year, there is an improvement of 1.6 per cent in sales volumes. Low inflation, the Jubilee celebrations and summer sales being brought forward have successfully combated challenges such as quarter rent day, poor weather and drop in footfall.
“Bucking previous trends, the SME market faired well in June 2012 with an increase in the value of sales of 4.1 per cent compared to June 2011, whereas the larger stores were just estimated to have an increase of 1.2 per cent. Consumers are increasing their online shopping and are demanding a more personal and time savvy shopping experience. Those retailers that can add value as well looking to reshape their business accordingly will fare well.”
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