There is good news for the high street this week as new figures from Deloitte show that the number of retailers entering administration fell by a third in the first six months of the year. But while the news will be welcomed by shops, workers and landlords, insolvency firm Begbies Traynor may not feel the same way after seeing its annual profits plunge by more than half.
The figures show that the number of retailers forced into administration in the first half of 2013 fell by 30 per cent to 87. In the same period last year 124 retailers went bust. Even more significantly the number of shops affected in the first half of 2012 was 2,300 while, this year the figure dropped by nearly 50 per cent to 1,400.
In employment terms, the number of workers employed by insolvent retailers in the first half of 2012 was 28,000, compared to a total of 15,000 so far this year.
Lee Manning, a restructuring partner at Deloitte, highlights the fact that retail administrations fell in every part of the UK. He explains the fall by saying that the weaker players have already disappeared and those that remain are better equipped to face the tough conditions of today’s market.
The news comes in the same week that Begbies announced that pre-tax profits have fallen by 57 per cent to £2.4 million. As a result Chairman Ric Traynor may be one of the few businessmen who would welcome an interest rate rise.
“Typically when we come out of recession and rates begin to rise that’s when marginal businesses become non-marginal,” he said.
In the meantime, Begbies is not expecting an ‘improvement’ in circumstances and is planning to cut costs by £2 million this year.
