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Christmas trading 'critical' for many UK retailers

UNDER pressure retailers are facing a critical Christmas as they look to escape the "killing season" in January, a month that has seen a number of big chains collapse over the past two years.

Nick Hood, of corporate health monitoring specialists Company Watch, said: "Retail stakeholders will be watching very closely as the festive season gathers pace.

"They will monitor sales and profitability carefully to decide which retailers will survive the traditional killing season from late December to mid-February living to fight on through a rapidly changing retail battleground in 2014 and beyond."

In January HMV, Blockbuster and Jessops all called in administrators after lacklustre festive sales.

There are more than 20,000 vulnerable UK retailers, according to Company Watch. About 5,000 are expected to fail. However September's quarterly rent date, which falls tomorrow (30th September), is not expected to push any major retailers over the edge.

Hood said: "This is the one rent quarter day when most retailers can rest relatively easy. Only the most severely distressed businesses are at risk of being pushed over the financial cliff now by landlords or their lenders, or denied deliveries by suppliers or credit insurers." Since the start of 2012 there have been 19 major retail failures affecting 58,000 jobs, 4,500 stores which cost ordinary suppliers and landlords £1.9 billion.

The Local Data Company and PricewaterhouseCoopers say that town centre stores are shutting down at a rate of 18 a day.

The British Retail Consortium is urging the Government to bring forward a review of business rates, blamed for causing great hardship.

There has also been a huge rise in "zombie" retailers, companies with liabilities bigger than their assets. In 2008, there were 8,598 of them with negative equity of £1.1 billion. In 2012 these figures grew 134 per cent to 20,152 while negative equity rose 109 per cent to £2.3 billion.

Hood added: "Despite growing confidence about the economy and signs of a retail recovery, there are still far too many zombie retailers, with negative balance sheets and debt burdens they can barely service, never mind reduce.

"There are also too many with ineffective online and mobile sales channels and bloated store portfolios that are becoming little more than expensive showrooms or online collection and return points.

"There are better times ahead, but not for all."

Source : Ravender Sembhy - Express.co.uk
www.express.co.uk/finance/city/433022/Christmas-will-make-or-break-UK-retailers

29 September 2013
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