Nearly 5,000 jobs lost as a result of retail administrations last year
A new report has revealed that more than 735 stores were closed with the loss of almost 5,000 jobs as a result of retail administrations last year.
Analysis from restructuring and advisory firm FRP Advisory shows that 13 major high street retailers were placed into administration in 2014 although the UK store survival rate rose to 42%, up from 35% in 2013.
The four large administrations that contributed to the total number of stores closed were Phones4U, La Senza, Jane Norman and Internacionale. However, after stripping out the rescue of a large part of Phones4U’s store portfolio by its main mobile network providers, the year’s store survival rate was only 24%, the worst in four years.
The staff survival rate also increased in the year, rising to 50% from 48% at the end of 2013. This was also bolstered by the Phones 4U rescue.
Glyn Mummery, partner at FRP Advisory, said: “The high street has finally turned a corner and is re-emerging after four years of significant store culling, in a fitter albeit leaner shape with retailers having to cope with a new norm of tougher operating margins but boosted by a return in consumer confidence and spending power helped by cheaper fuel costs.
“But it is still a place where only the fittest will survive and inevitably at some point in the near to medium term the benefit of a low interest rate environment will end which for several years had allowed a few retail zombies to refinance for a last lifeline.”
The figures also reveal a better performance from high streets in the first quarter of 2015 with three major high street administrations affecting 125 stores, 70% of which survived.
Mummery continued: “We anticipate that for the 18 months ahead as the economy continues to hold firm with consumer confidence spreading further onwards from London and the south east, there will be fewer retail failures overall but still those chains which come under cash flow pressure after years of under investment to manage through the downturn but leaving them vulnerable to sudden pick-ups in demand and strain on working capital.”
