Administrations soar as conditions remain tough

Advisory firm Deloitte, the adminsitrator of Oddbins, has reported a 30% increase in retail company administrations in the first quarter of the year, with many companies finding it difficult to secure funds, as a CBI report announced the pace of growth to be “subdued”.

Deloitte’s report showed that 60 businesses went into administration between January and March, up from 46 in the same period last year and is in fact the highest number for any quarter in the last two years. Nor did the figures include Oddbins, which went under on 4 April.

Lee Manning, Deloitte reorganisation services partner and Oddbins administrator, said: “The sector is heavily reliant on buoyant consumer spending and the increase in VAT and the government’s austerity measures are undoubtedly hitting the sector hard.

“In particular, smaller retailers are likely to be feeling the pinch more so than ever, as they often have little grounds to negotiate flexible credit terms with suppliers and may find it difficult to raise funding.”

Meanwhile, CBI stated that while sales volumes on the high street had risen in April, the pace of growth remains “subdued”.

The survey reported that only 12% of retailers reported good sales compared to 35% who were less than happy with their turnover.

CBI chief economic adviser Ian McCafferty said: “For the third month in a row, retailers considered sales to be unseasonably poor, stocks are running quite high and orders with suppliers are expected to fall.

“With few signs of demand picking up rapidly in the coming months, conditions on the high street look like remaining tough for retailers.”

Rupert Millar, 09.05.2011