Insight: 19% of fashion retailers showing signs of financial distress

New research has found that some 19% of UK clothing retailers currently exhibit early warning signs that they are at risk of going insolvent.

According to the study by accountancy firm Moore Stephens, 6,580 out of the 35,078 fashion retailers analysed showed early signs of financial distress.

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Jeremy Willmont, head of restructuring and insolvency at Moore Stephens, said clothing retailers had faced some of the most difficult trading conditions since the recession in the past year.

He added: “Fashion retailers have been hit by the perfect storm of rising costs, falling consumer spending and increased competition. All three have heaped pressure onto revenue and made profit margins difficult to maintain. The increasing popularity of online-only retailers, who have more manageable bills for business rates and lower payroll, means that many fashion retailers will need to improve their ‘bricks and clicks’ offering if they are to thrive.”

Last month, East was the latest high profile fashion retailer to enter insolvency following on from Jaeger and Store Twenty One in the past 12 months.