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Number of UK retailers facing "critical" financial distress rises over 25 percent in Q4
(MENAFN) The number of UK retailers facing "critical" financial distress has increased by more than 25 percent in the final quarter of 2024, according to a new report by Begbies Traynor, the UK's largest insolvency practitioner. This rise in distress levels highlights the growing pressures on the retail sector as businesses contend with factors such as subdued consumer confidence, rising operational costs, and challenging market conditions.
During the first 11 weeks of the October-December period, 2,124 retailers were identified as being in "critical financial distress," up from 1,696 distressed retailers in the previous quarter, July-September. Although this figure is slightly lower than the 2,142 distressed retailers reported in the same period of 2023, it still points to ongoing struggles within the industry.
Julie Palmer, a partner at Begbies Traynor, attributes the increase in financial difficulties to a combination of rising costs and a reduction in consumer spending power. The weaker-than-expected retail sales performance in November, a traditionally important month for retailers, further underscores the difficult trading environment. Palmer noted that while some retailers have managed to cope with financial pressures, many, particularly in general retail, are finding it difficult to navigate the escalating operational costs and tight consumer budgets.
At the same time, the Bank of England has raised concerns about the weakening UK economy, as various indicators of near-term economic activity have shown a decline in recent weeks, adding to the challenges retailers face.
During the first 11 weeks of the October-December period, 2,124 retailers were identified as being in "critical financial distress," up from 1,696 distressed retailers in the previous quarter, July-September. Although this figure is slightly lower than the 2,142 distressed retailers reported in the same period of 2023, it still points to ongoing struggles within the industry.
Julie Palmer, a partner at Begbies Traynor, attributes the increase in financial difficulties to a combination of rising costs and a reduction in consumer spending power. The weaker-than-expected retail sales performance in November, a traditionally important month for retailers, further underscores the difficult trading environment. Palmer noted that while some retailers have managed to cope with financial pressures, many, particularly in general retail, are finding it difficult to navigate the escalating operational costs and tight consumer budgets.
At the same time, the Bank of England has raised concerns about the weakening UK economy, as various indicators of near-term economic activity have shown a decline in recent weeks, adding to the challenges retailers face.
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