Gloomy report predicts half of UK’s non-food retailers could go bust by September
But ICSM Credit's lifeline could help prevent many from going bust
A report by Retail Economics and Alvarez & Marsal (A&M) paints a gloomy outlook for retailers this summer as a result of core financial problems and the coronavirus shut down.
The report has found that more than half of this country’s major non-food retailers will deplete their entire working capital should the COVID-19 lockdown continue through the summer.
Published in the on April 8, the report states: “Large multiple retailers were under significant pressure going into the crisis, driven by a legacy of inflexible lease structures and changing shopping habits. Five out of the 34 major non-food retailers analysed already had negative cash flow at the outbreak of the pandemic, a possibility even for large, profitable companies that rely on credit and capital markets to fund investment, growth, and shareholder returns.”
The report shows that a 10% reduction in sales would have resulted in over two-thirds of major U.K. retailers falling into negative cash flow. But sales are forecasted to have dropped as much as 70% since the lockdown tipping every retailer sampled into immediate negative cash flow.
It continues: “Analysis by A&M and Retail Economics suggests that near-term liquidity over an initial three-month lockdown period is manageable for most large retailers. Should the lockdown persist into the summer, working capital demands will intensify and large parts of the sector will be decimated as swathes of retailers seek additional funding in order to survive.”
Help for retailers and all businesses during the lock down
Ian Carrotte of ICSM Credit said the findings were depressing but realistic with many retailers in trouble before the coronavirus crisis. He said: “The pandemic will have lasting effects on how people live and shop with online growing as habits set in. It will also mean more business to business will be online. In the meantime it is essential to pull up the drawbridge and urgently cut costs and chase down overdue invoices.”
He said ICSM Credit’s free temporary membership and free legal letters to help firms get paid money they are owed during the crisis was proving popular.
“Most firms are paying their bills if chased – something ICSM Credit is good at with our debt collecting department – but we are also offering free temporary membership and legal letters which mean struggling retailers and any business can use ICSM for free and recover debts to help them through the lock down,” he said.
Retailers covered in the report:
AO.com
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Mulberry
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ASOS
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N Brown Group
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B&M
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Next
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Boohoo
|
Pets at Home
|
Burberry
|
Photo Me
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Card Factory
|
Quiz
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DFS
|
SCS
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Dixons Carphone
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Shoe Zone
|
Dunelm
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Stanley Gibbons Group
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Fraser Group
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Studio Retail Group
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French Connection
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Superdry
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Games Workshop
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Ted Baker
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Halfords
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Topps Tiles
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Howdens
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Travis Perkins
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JD Sports
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United Carpets
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John Lewis of Hungerford
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Watches of Switzerland
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Kingfisher Group
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WH Smiths
|
Moss Bros Group
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Picture: Retail Gazette
About ICSM Credit
For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers. Follow ICSM Credit on FaceBook, Twitter and YouTube and Ian Carrotte on LinkedIn.
To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the home page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com
For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk
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