Four in 10 UK fashion retailers at risk of failure as profits sink
December 27, 2016
Asian Image comments on research carried out by Opus Restructuring which shows that 44% of the UK’s fashion retailers are at serious risk of either insolvency or a major financial restructuring. This worrying outcome is a sharp deterioration since the same time last year, when only 37% of rag trade companies were deemed to be at risk. The research was based on data supplied by the corporate financial monitoring specialists, Company Watch.
Opus also found that the UK’s larger fashion outlets are in better shape than their thousands of smaller rivals. But even major chains are struggling to maintain their profitability. Total profits among the big high street fashion names last year were £1.87bn, down 28 per cent from two years earlier.
Nick Hood, business risk adviser at Opus, said:
“The UK fashion retail sector is under exceptional strain, with plenty of anecdotal evidence of sustained periods of discounting as consumers demand ever-lower prices and as the fall in sterling impacts their costs and profit margins. The failure of BHS and Austin Reed earlier this year shows what fate awaits clothing retailers who fail to invest and stay relevant to a constantly changing market.
“Whilst it seems likely that the major outlets will be reporting sharply lower profits, the real pain is being felt by mid-sized chains and thousands of smaller retailers, who are facing a truly bleak future.”