Pressure eases on NW business

By August 2, 2011Finance, News

Signs of distress amongst North West business are falling, according to research from insolvency trade body R3.

 

The latest quarterly Business Distress Index from R3 reveals that 59 per cent of businesses in the region are showing at least one sign of distress, down from 73 per cent the previous quarter and 83 per cent at the end of last year. However retail sector is experiencing significantly higher signs of distress than any other sector.

 

Throughout the country as a whole, eight per cent of retailers say that they are very likely to enter into insolvency in the next twelve months, compared with a cross-sector average of two per cent. Six in ten (58%) retailers are experiencing a decrease in profit, almost half (48%) have suffered a fall in sales, and a quarter report cash flow difficulties.

 

The retail sector has seen a string of retail failures including Jane Norman, Habitat and TJ Hughes in the wake of the last quarter day in June, when rent traditionally falls due.

 

Jeremy Oddie, chair of R3 in the North West and head of recoveries at Mitchell Charlesworth, said: “While it is encouraging to see that North West businesses in general are under less pressure, the outlook for retailers remains bleak. As consumers have less money to spend, stores are having to reduce prices to get people through their doors at a time when inflation and costs are increasing. The fact that one in four are experiencing cash flow difficulties suggests they are holding a large amount of stock or have slow moving stock.

“The next quarter day could prove difficult for many to weather as it falls at a time when most retailers will be replenishing their stock ahead of Christmas, and unfortunately this year consumers are likely to hold off spending until the sales. Those who are concerned about cashflow should seek professional advice.”

 

Leave a Reply