Prospects bleak for retailers

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ALMOST seven out of every 10 businesses across Yorkshire and Humber are showing signs of distress, according to insolvency trade body R3.

That’s worse than any other region outside London.

R3 Yorkshire committee member Gareth Self, an insolvency practitioner with leading Sheffield-based corporate recovery and debt specialist P&A says the outlook is bleak for Yorkshire firms.

“The numbers show that we are bearing the brunt of the tough times here in this region,” said Mr Self.

Retailers were particularly hard hit: “The pressure on retailers is two-fold. As consumers have less money to spend, stores are discounting their prices to get people through their doors; this is at a time when inflation and rising commodity prices have increased retailers costs.

“Given the importance of retailing to our region, it is extremely worrying that nationally one in four are experiencing cash flow difficulties. This suggests that many are holding a large amount of stock or have slow-moving stock.”

“Unfortunately this year cash-strapped consumers are likely to hold off until the Christmas sales before making significant purchases, thus putting further strain on retailers in the coming quarter.

“This bleak outlook is coupled with a trend that sees creditors becoming generally less supportive, with only around a quarter of businesses stating that banks, HMRC or trade creditors have shown support in the past quarter, a figure that is down from over 40 per cent just three months ago.”

R3 says indicators of distress include cutting wages, cash flow problems, concern over debts and worries about bank loans.

Retailers are showing more signs of stress than any other sector.

Two out of five are concerned about debt and 8pc say they are likely to become insolvent in the next 12 months.

That is four times higher than the average for all sectors.

n The Star opinion: P8